Ryman Healthcare Limited (RYM) Earnings Call Transcript & Summary

Good morning, and welcome to Ryman Healthcare's 2026 Annual Shareholder Meeting. I'm Dean Hamilton, Chair of the Board. Thank you for joining us here in Auckland and to those who are joining online. After a number of requests, it's nice to be here in Auckland for this year's annual meeting. And hopefully, a number of our recent shareholders have been able to make it along today. Before we begin, a few brief housekeeping items. Bathrooms are located on the first floor in the atrium. Should the fire alarm sound at any point, please leave the room immediately via the fire doors and proceed down the internal and external stairwells. The evacuation assembly point is located in the car park behind the building. Please follow the instructions of all staff at all times. Can I please ask that you all take a moment to ensure your cell phones are switched to silent mode. Thanks, Hamish, including directors. As a reminder, today's meeting is a hybrid meeting. For those online, if you have any technical issues, please refer to the virtual portal guide or phone the helpline on 0800-200-220. If you are online and have questions, you can submit them 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 the time to answer these questions at the appropriate time during the meeting. Voting on the resolutions will be conducted by way of a poll. All resolutions in today's meetings 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 on the way in. 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 staff from MUFG Corporate Markets will 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 a Voting Card button within the online meeting platform, 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. This morning, I'll start by outlining the progress we've made strengthening the business and starting to rebuild long term value for shareholders. Naomi James, our Chief Executive, will then take you through performance, strategy and outlook. We'll move to formal business before opening for questions. Following the conclusion of the meeting, we invite you to join the Ryman Board and Executive team for some light refreshments. Joining me today are my fellow directors, from my left, Scott Pritchard, Paula Jeffs, James Miller, Hamish Rumbold, Kate Munnings and David Pitman. Over the last three years, we have deliberately strengthened the Board to ensure we have the capability required for Ryman's next phase. This has been a significant period of Board renewal, bringing new capability across governance, customer, digital, operational performance, development and capital markets experience. We were pleased to appoint Hamish Rumbold in May. Hamish brings deep expertise in customer, digital and operational performance, capabilities that are we believe are directly relevant to how we are improving the business today. Hamish will speak more to his experience later in the meeting. As previously announced, Paula Jeffs will retire at the conclusion of this meeting. Paula has made a significant contribution for a period of real change for Ryman, and we thank her for that. As part of the normal Board rotation, I, along with James Miller and Hamish, will stand for re-election today. Also joining me on stage this morning is our CEO, Naomi James. The Ryman senior executive team are all here today, and I encourage you to introduce yourselves to them over refreshments following the meeting. Representatives from our auditor, PwC, and our share registrar MUFG are also in attendance. FY '26 marks a clear turning point for Ryman. Over the past two years, we have taken decisive action to reset the business, strengthening governance, changing leadership, restoring financial strength, improving transparency and reshaping how we operate. That work was necessary. We believe that Ryman is now back in control of its performance and its future. In FY '26, we saw tangible results. We saw a material improvement in operating profitability, we saw meaningful cost reductions and a return to positive free cash flow for the first time in more than a decade. We are achieving this in a challenging environment, with the last three years being reported as New Zealand's most prolonged housing market slump in 15 years and the Victorian housing market also suffering through wide-spread tax changes in Australia. This is not a short-term business recovery. It reflects a structural shift in how the business operates, a more disciplined, a more resilient and more commercially focused organization. We acknowledge that our share price is not where it needs to be. Your board and management are very aware of this. We are shareholders. Whilst there was a partial recovery to $3 per share as recently as January this year as investors saw green shoots in the New Zealand economy, the subsequent global disruption caused by the Middle East conflicts and reduction in consumer confidence that followed, and housing market becoming weaker has contributed to those gains [ essentially ] has being given back. Whilst the share price retreat has been very disappointing, our focus as a Board remains firmly on what we can control: Execution, performance, and disciplined capital allocation. As we stated at the full year results, we will consider all capital management options when allocating our free cashflow. We are building a stronger business, and we are confident that, over time, this will be reflected in improved shareholder returns. A critical part of our reset has been restoring financial discipline and strength. In FY '26, we completed the balance sheet reset. Today, Ryman has a strong and flexible funding position, no bank maturities until fiscal year '31 and significant liquidity headroom. We also had the lowest gearing among New Zealand's listed retirement village operators, giving us real flexibility as we work to improve the performance of the underlying business. Building on that foundation, we introduced a clear capital management framework in February this year. Our priorities are simple: improve the cash generation of the business, grow recurring earnings, and maintain balance sheet flexibility with the option to grow when conditions are supportive and only when conditions are supportive. In June, we completed a $150 million retail bond offer, which was strongly supported with demand of more than $400 million, reinforcing confidence in the business and re-establishing Ryman as a repeat issuer in the retail debt market. We believe we now have a well-balanced funding structure. The Board reiterates its intention to return to dividends from FY '28, importantly paid out of operating cash flows not funded by debt as it had been in the past. We have made a deliberate shift in how we approach development. Historically, growth was heavily driven by the construction of new villages. At its peak in 2022, Ryman had 16 villages under construction, with debt growing to over $3 billion by the end of that calendar year. The business was on a treadmill it couldn't enough get off. With capital became constrained, independent living units were prioritized to generate cash and support capital recycling with the main buildings where the amenity and care was, that were deferred. Those main buildings contained many of the amenities, our care centers and serviced apartments we had committed to residents. Over the past two years, this Board has delivered five of those deferred main buildings. While that was the right thing to do for residents and the long-term health of the business, it has created a near-term earnings headwind as we absorb the operating cost and fill the significant new capacity in serviced apartment that we brought on at one time. Today, our focus is different. Maximizing value from our existing portfolio and improving cash flow, with the goal of returning to disciplined growth only when we are very confident this will deliver returns for shareholders. With our shares trading at a significant discount to NTA, the Board has a very high threshold for new developments in this environment. Therefore, our biggest opportunity is to maximize the performance of our existing portfolio of 47 villages. Management are focused on driving up occupancy, improving revenue per room across care and independent living and reducing our overheads. Management have made significant progress in increasing care premiums, bringing up to date our independent living weekly fees in line with cost inflation, and increasing our deferred management fees on independent units from 20% to 30%. However, it takes time for these changes to be reflected in reporting earnings as they only are affecting new residents. For the year just passed, only 17% of our retirement residents were on our new terms. And we estimate by 2029, only 50% of our residents will be on these new terms. The other part of performance is the inflation in our retirement units over time. These have over time closely matched the inflation in house prices more generally. We clearly have less control over the second component of our overall returns. We know that achieving both improved operating earnings and inflation in our retirement units will be critical to long term shareholder returns. In terms of new villages, we ended the year with only two sites under active construction. This is intentional; reducing risk, lowering capital intensity and improving resilience. We still have a significant amount of available land at new sites and existing villages, but going forward, development will be selective, demand-led and at a controllable scale. Alongside this repositioning, we continued to deliver a number of important building milestones during the year. We completed and opened the beautiful main building at Kevin Hickman Village in Christchurch, which Naomi and I opened earlier in the year. We welcomed residents to the newly completed stages at Nellie Melba Village in Melbourne, and we have marked the official openings at Keith Park Village in Hobsonville and James Wattie Village in Havelock North. These openings are important not just as construction milestones, but as a signal that recent development activity is now transitioning into occupancy, care delivery and cash flow. Across the portfolio, we welcomed more than 3,700 new residents during the year who now call Ryman home. Development remains an important part of our future but only when conditions and returns support it, rather than being driven by Always On development program. Rebuilding long term value for shareholders is the Board's focus, and we've been very deliberate in how we've approached it. We have reset the business across governance, leadership, strategy, capital structure, financial reporting, executive remuneration and operating discipline. All of this, whilst keeping the resident at the heart of everything we do. We know we need to provide a great experience for residents and for our shareholders. On the latter, we know we have work to do. We have made significant improvements in our financial reporting and transparency. Whilst this has been challenging to work through, the improved transparency, more conservative accounts and greater comparability with others will put us in a stronger position going forward. Executive long-term incentives are now directly aligned to shareholder outcomes, and both the Board and executive leadership have minimum shareholding requirements. During the year, we successfully completed our secondary listing on the ASX. This overtime will expand our access to capital, improve liquidity and reinforces our long-term commitment to Australia, a market we believe with significant structural demand for what we offer. Ryman is now operating as a more disciplined business with a strong focus on returns. We remain committed to our sustainability journey and have continued to mature our approach, as set out in our latest climate-related disclosure report. In FY '26, Ryman's Scope 1 and 2 market-based emissions decreased by 30% compared to the prior year, and representing a 58% reduction compared to our 2021 baseline. The Ryman Healthcare Solar Farm in Northland became fully operational, making Ryman the first retirement village operator in New Zealand to secure a dedicated, commercial-scale renewable energy source. Whilst the solar farm is owned by third parties, our commitment essentially underwrote the development. This milestone reflects our commitment to residents, communities and the environment, and will supply around 60% of our New Zealand village electricity needs, so significant indeed. In terms of our people, if we look across our whole workforce of 7,800 employees, we have around 80% female representation. And our gender pay gap is essentially at nil in both New Zealand and Australia. We are also pleased to report that we have 48% female representation across the top two levels of leadership and the Board. We acknowledge that the Board gender diversity will reduce post Paula's retirement, the Board continues to consider diversity as well as required skills and capability in making new director appointments. This is a point in time, and we are committed to improving our Board gender diversity over time. Throughout this reset, one thing has not changed, our purpose: To enhance freedom, connection and wellbeing for people as they grow older. That remains central to how we operate and how we create value. Ryman today is stronger, more disciplined, and better positioned for the future. As we enter this next phase, it's also important that the way we present Ryman reflects who we are today. Special communities built around our unique home-for-life proposition, supporting residents with freedom, connection and wellbeing and the reassurance that care is there as their needs change. Last month, we refreshed the Ryman brand to better express our purpose and the confidence, care and connection at the heart of our villages. In simple terms, it's all taken care of. This is not a change in who we are, it's just a clearer expression of what makes us special. To our shareholders, thank you for your patience and continued support as we progress this next phase of the journey. Rest assured, we are very, very focused on rebuilding value for you, our shareholders. To our team, thank you for your ongoing commitment for delivering great care, every day. To our residents and their families, thank you for your trust in Ryman and for being part of and contributing to our village communities. With that, I will now hand over to our Chief Executive, Naomi James.

Thank you, Dean, and thank you everyone for being here today. FY '26 marks an important point in time for Ryman where the business is resetting and is now translating into improved performance, stronger cash flow and a more resilient balance sheet. Our focus is now firmly on unlocking long-term value from that foundation. I want to start by sharing a couple of the insights from our investor day earlier in the year, which shared the basis for our refreshed strategy. To understand the opportunity ahead for Ryman, it's important to start by stepping back and looking at the market we are operating in. The demand for care-centered living is clear and compelling. The population aged over 80 across New Zealand and Australia was expected to double by 2050, with demand already outpacing supply. In New Zealand alone, there is a projected shortage of more than 10,000 aged care beds by 2032. This demand is already evident today, and it's increasingly shifting toward assisted living and higher-acuity residential care needs. That trend plays directly to Ryman's strengths. More than half of our portfolio is now weighted toward aged care and serviced apartments, positioning us well to benefit from these long-term demand trends. Our integrated model provides residents with a genuine home for life, supporting them as their needs evolve from independent living and assisted living through to hospital-level and dementia-level care. While this positions us strongly for the future, it's also important to acknowledge that Ryman has not always captured this opportunity as effectively as we could have. So, when we refreshed our strategy in FY '26, we focused on two things; building on what Ryman does well and being honest about what needed to change. We want to maintain the industry leading resident experience and high-quality clinical care which have been the foundation of our organization's purpose and values, driving resident satisfaction, brand and community trust. At the same time, we needed to address what has got in the way of our financial success. Ryman held weekly and deferred management fees very low for a long time. Costs escalated, particularly through COVID, leading to significant operating deficits. The company chased a larger and larger portfolio of development projects which created a compounding risk profile. Non-village costs grew faster than resident numbers, and the company had not scaled its processes and systems to match the size of the organization. The lack of financial performance transparency, alongside the strong growth in property prices, meant the financial impact of this was not entirely visible. As Dean spoke to earlier, we have shifted from a model that relied heavily on development and capital gains to one focused on sustainable value creation. Put simply, this represents a deliberate shift away from a development-led model to one focused on optimizing existing assets and generating sustainable cash flow. We are focused on four key drivers of shareholder value: leading the industry in care-centric living, growing recurring earnings, lifting returns from our existing portfolio and allocating capital in a disciplined, value-accretive way. We are maximizing returns from the assets we already have, lifting occupancy and improving utilization across both retirement living and care. Care sits at the center of our model. It delivers better outcomes for residents and more stable, resilient earnings profile over time and is increasingly a key driver of earnings growth. We are being more disciplined in how we allocate capital, with a clear focus on returns and ensuring capital is only deployed where it's value accretive. This strategy was designed to reduce capital intensity, improve cash conversion and deliver more consistent and predictable earnings over time. Importantly, these initiatives are already underway and are driving the improvements we saw in FY '26. For the first time in more than a decade, Ryman generated positive free cash flow of $188 million, which is a significant milestone for the company. Earnings momentum is building. Operating EBITDAF, which is our preferred measure of operating profitability, almost doubled over the year, driven by strong revenue growth and broad-ranging cost-out initiatives which have delivered $57 million in annualized savings over the last two financial years. Our reported loss before fair value movements and tax has also substantially reduced. These outcomes reflect the benefits of a more disciplined operating model and a clearer strategic focus as we build a more resilient and sustainable business for the long term. Looking at our FY '26 result, it's clear we still have a way to go. Which brings me to the targets we've set for FY '29, shared at our Investor Day in February. These targets are how we measure the turnaround in financial performance in the near term, as we improve cash generation, grow recurring earnings and increase balance sheet flexibility. In FY '26, we delivered $47 million of sustainable cash flow improvement from existing operations, driven by occupancy, pricing and cost out, which puts us on track for our FY '29 target of a $150 million improvement. We are releasing significant cash from the balance sheet, with $169 million of our $500 million target achieved last financial year. This was driven from both selling down new stock and our land divestment program. To the end of FY '26, we had settled or contracted $147 million of land sales. And in May, we lifted our land divestment target from $200 million to $250 million. We delivered aged care EBITDAF per bed of nearly $18,000 in FY '26. With a continued focus on lifting occupancy and utilization across our aged care centers, we are targeting to lift this metric to $25,000 to $30,000 per bed by FY '29. From here, execution is about consistency. Continuing to convert these initiatives into reliable, repeatable performance, while ensuring future growth is disciplined and value-accretive. We are executing this turnaround at pace and in a housing market that remains subdued. In this environment, it's pleasing to see the signs of the benefit of our strategy coming through, with improvement in our serviced apartment sales evident in our latest quarterly update. As Dean noted earlier, the housing market remains challenged, impacting independent living sales and we have seen a shift in the sales mix towards serviced apartments in a highly competitive environment. Total Q1 FY '27 resale volumes have remained in line with the same period last year and net resales contract volumes increased by 7%, with serviced apartments accounting for a higher proportion of the mix. Occupancy in mature care centers remains high at 96.1% in Q1 FY '27, unchanged from Q4 FY '26. We're encouraged by these indicators, but success at Ryman isn't measured solely in financial or operational metrics. Ultimately, the strength of our business depends on the experience of our residents and the quality of care we provide every day. More than 15,500 residents call Ryman home, and we deeply value the communities they help create across our 47 villages. The quality of care and resident experience remains strong. Resident satisfaction remains high, reflected in strong Net Promoter Scores and continued external recognition across the sector. In FY '26, Ryman was named Best Group Provider by Seniors New Zealand for the sixth time, with a further 14 awards recognizing individual villages. Diana Isaac Village received the Enduring Excellence Award of 2025, reflecting more than 5 years of sustained high performance, an honor awarded only six times in the past decade. We are proud to offer our residents choice in retirement living, and the confidence of knowing they have access to high-quality care as their needs change. I want to acknowledge and thank our team members across all of our villages for the care they provide to our 15,500 residents each and every day. I also want to thank our residents and their families for the trust they place in us, and the contribution they make to the vibrant and supportive communities that make each Ryman village so special. Maintaining a high-quality resident experience is essential, and we also recognize that customer expectations are evolving. To support and continue attracting future generations of residents, we need to evolve our offering alongside those changing needs. This evolution is about better matching customer demand and supporting occupancy, pricing and models of care over time. The market is changing. Residents are looking for more choice, more flexibility and greater confidence that care will be available as their needs change. The strongest growth across the sector is in assisted living and aged care, and that is where Ryman is positioned. Our villages are designed to support residents through every stage, providing choice, flexibility and reassurance that care will be there when it is needed. We are introducing more flexible pathways into village living, including initiatives like Ryman Select, which give residents greater control over the services they choose and the ability to adapt those services as their needs change. We are also expanding our premium care offering, combining high-quality accommodation with 24/7 clinical support and piloting premium care apartments to meet demand for higher-acuity, higher-expectation living and improving how residents transition into care. Another example is the Resident Fund, which is unique to Ryman and helping make the transition into aged care simpler for our residents. We know that moving into aged care can be a significant financial decision for residents and their families. The Resident Fund was designed to make that transition simpler by allowing residents to use equity from their village home to help fund their aged care accommodation premium. This reduces the day-to-day cost of care, provides greater flexibility and choice and helps residents move into the right level of care when they need it. The response since launch has been encouraging. The product is supporting smoother transitions into care for residents while also increasing capital retained within the business. And we see further opportunities to refine and expand the product over time as part of our broader focus on meeting the growing demand for care-led living. The Resident Fund is a good example of how we're adapting our model to meet changing resident needs. Importantly, it's also consistent with the broader direction of aged care funding reforms, which increasingly supports more integrated care and greater choice for older people. There is now broad recognition on both sides of politics in Australia and New Zealand of the importance of the aged care sector funding reforms, not just to ensure care is available for older people, but to ensure the health system is there for all Kiwis and Australians. Aged care is healthcare. A strong aged care sector is key to a sustainable health system, providing care in the right setting and helping ensure hospital services are available to those who most need them. The direction of travel is clear: more care delivered in the home, greater integration across aged care and the wider health system, and closer partnerships between public and private providers. As demand grows and care needs become more complex, providers like Ryman will have an increasingly important role to play. This will ensure people receive the right care, in the right place, at the right time. Ryman is well positioned in this environment. Our integrated model aligns directly with where policy settings are heading. Importantly, this supports better utilization of existing assets which directly improves returns. In Australia, following recent reforms, Ryman is already providing over 50% of serviced apartment residents and over 20% of independent residents with Support at Home packages. In New Zealand, we are awaiting release of the recommendations of the Ministerial Advisory Group on funding reforms and are expecting to see the government's response ahead of the New Zealand election later this year. The aged care and retirement living sector have a critical role to play to ensure the growing health needs of a much larger older population are met, and the health system can deliver for all Kiwis. The urgent reforms in New Zealand represent the critical next step to ensure the sector is able to play this important role. To conclude, I want to highlight the investment proposition for Ryman today. While the global environment remains uncertain and housing markets remain mixed, the structural demand for care and retirement living is clear. We have reset the business, strengthened the balance sheet, reduced development risk and reestablished cash flow. Demand remains strong, particularly in care-centered living, and we are aligning our offering, operating model and capital allocation to meet that demand more effectively. We now have a disciplined strategy, a clearer earnings profile and a more resilient operating model. The improvement in our financial performance, even in mixed market conditions, demonstrates that this model is delivering improvements. Bringing this together strong structural demand, a lower-risk, cash-generative model and disciplined capital allocation positions Ryman very differently today than two years ago. Thank you for your continued patience as we progress our transformation. With that, I will hand back to the Chair to move to the formal business of the meeting.

Thank you, Naomi. Before we move to general business and your opportunity to ask questions, we will now move to the formal meeting resolutions, which were outlined in the Notice of Meeting, which you all have. 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 of the room. For those of you voting online, you will need to click Get Voting Card within the online meeting portal. Please mark your electronic voting card in the way you wish to vote by clicking for, against or abstain. Once you have made your selection, please click submit vote on the bottom of the card to lodge your vote. A quick reminder that voting will remain open until 5 minutes after the conclusion of the meeting. Results of the vote will be announced via the NZX. The outcome of proxy votes received prior to the meeting will be displayed after. 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. When I call for questions, can shareholders please -- present in the room, please make your way to a microphone stand on either side of the room and clearly state your name. I will take questions from those present in the meeting first before moving on to any questions from shareholders online. I ask that in the interest of fairness to all shareholders attending this meeting that anyone wishing to ask questions be as concise as possible and be considerate of other shareholders also 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? Are there any questions online?

There are no questions online for Resolution 1.

Thank you. Could you please mark your voting cards now? [Voting]

Moving on to the second resolution. I will ask James to lead this.

Under NZX Listing Rule 2.7.1, a director appointed by the Board must not hold office without reelection past the next annual meeting following the Board -- following the director's appointment. Dean Hamilton was appointed to the Board with effect from 1st of June 2023. Dean accordingly retires and offers himself for reelection. Dean is considered by the Board to be independent. The Board unanimously recommends that shareholders vote in favor of Resolution 2. I would now like to invite Dean to introduce himself and to speak to his reelection.

Thank you, James, and apologies, you'll be hearing a bit from me today. Good morning, and thank you for the opportunity to offer myself for reelection to the Board of Ryman. As James said, I joined the Board in June 2023, some 3 years ago, and I became Chair a couple of months after that at the ASM in July 2023. I joined the Board with a clear mandate for change from shareholders. Shareholders have lost confidence in the company, in the Board, in the strategy and in the company's financial reporting. As a Director and Chair, we have overseen significant change over this period. We have progressively ushered in a new Board. We've introduced new management. We've raised new equity. We have simplified and refinanced our debt. We've increased transparency of our financial performance. We've signed off on what we believe to be a much more conservative balance sheet with substantially less director judgment involved. We've changed management long-term incentives to be aligned with shareholder returns, not underlying profit. We've significantly reduced overheads that were in the business. We've materially reset pricing in our retirement living. We've completed those village centers that I referred to earlier that have been deferred. And we've quickly wound down the scale of new development to reflect current conditions from 16 to 2. Importantly, we have reset our medium-term strategy to focus on maximizing the value of our current portfolio and getting match fit for the future. By most measures, that is a lot of change, and it has required a lot of time and effort by a lot of people. All of this has occurred in a very challenging residential property market and in a temporarily oversupplied retirement unit market. This is a multiyear turnaround to rebuild shareholder value. The share price performance has been disappointing. I fully acknowledge that. We have all lost money. Whilst a number of the issues impacting the share price have been Ryman specific, I would note that the other listed companies in New Zealand are also now trading at steep discounts to NTA, suggesting some wider industry issues at play on investors' minds. Ryman was the first to take the pain and lead into change. I'm optimistic that we will be the first to emerge on the other side. I believe we've been brave where needed, leaned into some hard decisions and have now built a much more solid Ryman. As I look back with the benefit of hindsight, the scale of changes required to move the company away from build it and they will come strategy, which was coming on start quickly with rising construction costs, rising interest rates and poor development controls has certainly been beyond my initial expectations. We are turning the corner. The job is by no means done, and I would urge you not to judge the outcome at half time. My first 3 years as a Director have been about helping uncover the issues, prioritizing the changes and overseeing the reset. The next 3 years, should I be reelected, is about overseeing the execution of our strategy, ensuring we maintain a great experience for residents, but importantly, also building much better returns for shareholders. I believe my strong governance experience, my prior CEO experience in running a large complex business through a significant turnaround and more recently, my understanding gained at Ryman over the last 3 years means I have the skills and experience to continue to add value as a Director of Ryman. It would be a privilege to continue to serve as Director of Ryman, and I would appreciate your support in being reelected. Thank you.

Thank you, Dean. Are there any questions for Dean or the Board concerning this resolution from shareholders in the room? Are there any questions online?

There are no questions in relation to Resolution 2 online.

I now propose that Dean be reelected a Director of the company. Thank you, and please mark your voting cards now. [Voting]

Thanks, James. Moving on to the third resolution. Under NZX Listing Rule 2.7.1, a director appointed by the Board must not hold office without reelection past the Annual General Meeting following the director's appointment. James was appointed as a Non-Executive Director by the Board with effect from the 1st of June 2023. James accordingly retires and offers himself for reelection. James is considered by the Board to be independent. The Board unanimously recommends that shareholders vote in favor of Resolution 3. I'd now like to invite James to introduce himself and speak to his reelection. Welcome, James.

Thank you, Dean. It's a privilege to speak to you today as I seek your support for reelection to the Board of Ryman Healthcare. Over the past 3 years, I've had the honor of serving as an Independent Director and as Chair of the Audit, Finance and Risk Committee. During my time, I have led strong financial stewardship and effective risk oversight to support Ryman's strategic ambitions. This includes the reset of financial reporting, equity recapitalization, bank debt refinancing and the recent bond issue. All this work has laid the foundation to move back to a growth phase and a return to dividends in the future. For me, personally, the total shareholder return during my tenure has been one a bit of disappointment. And while I can point to an array of causes, the buck always stops at the top. I sympathize with your position as shareholders. However, I do believe Ryman is now well set up for success under the leadership of Naomi James. My background as a chartered accountant and a fellow of the Institute of Chartered Accountants and the Institute of Directors has grounded my approach in integrity, accountability and transparency. Looking ahead, I believe we are now well into the recovery phase with a strong focus on the core of what Ryman is known for, superb care of the elderly in a vulnerable time in their life. Disciplined cost management, disciplined capital allocation and shareholder wealth creation. I believe the company remains well positioned to deliver value for its customers and shareholders and to be a great place to work. Thank you for the ongoing trust and the opportunity to serve. I'd be honored to continue contributing to Ryman Healthcare's success in the future, and thank you.

Thank you, James. Are there any questions for James or the Board concerning this resolution from shareholders in the room? Are there any questions online?

There were no online questions in relation to Resolution 3.

Thank you. I now propose that James Miller be reelected as a Director of the company. Thank you. Please mark your voting cards now. [Voting]

Moving on to the fourth resolution. Under NZX Listing Rule 2.7.1, a director appointed by the Board must not hold office without reelection past the next Annual General Meeting. Hamish Rumbold was appointed as a Non-Executive Director by the Board with effect from May this year. Hamish accordingly retires and offers himself for reelection. Hamish is considered by the Board to be independent. The Board unanimously recommends that shareholders vote in favor of Resolution 4. I would now like to invite Hamish to introduce himself and speak to his reelection. Hamish?

Thanks, Dean, and good morning, everyone. Thank you for the opportunity to speak today as I seek your support for reelection for the Ryman Healthcare Board. I'm a passionate Kiwi, who has lived and worked across New Zealand, the U.K., India, South America. And I graduated from the University of Auckland with a Bachelor of Commerce and a Bachelor of Property, plus ongoing leadership training and global executive programs throughout the world. Throughout my career, my main focus has been on delivering strong commercial results by connecting the customer experience with technology, data and digital tools. I started out in large-scale retail with Lion Nathan, Foodtown, Woolworths before spending 10 years overseas working with major international businesses such as Sainsbury's, BP and Cencosud in South America. When I moved back to New Zealand, I joined Air New Zealand, first leading customer experience and engagement and the Airpoints business and later running digital data and customer technology worldwide. After that, I was CEO of a software engineering firm across Australia and New Zealand and most recently spent 5 years as Chief Digital and Technology Officer of Kiwibank. During this time, I also served as an Independent Director on Fidelity Life Board and was on the Prime Minister's Cybersecurity Advisory Committee. In 2024, I moved into full-time governance to help drive growth for great local New Zealand businesses alongside Ryman. I also serve as Non-Executive Director for the Warehouse Group, for the House of Travel Holdings, for LIC, and as Chair of OrbitRemit and International Money Transfer business across Australia and New Zealand. In my view, Ryman provides a critical role to society and to residents across the Tasman. We deliver a true connected continuum of care, providing independent living through rest homes through to hospital care, all under one roof, which I think becomes increasingly important as more and more people grow older. As Ryman moves forward in executing its strategy, consistently maintaining high occupancy and reaching our target to bring non-village costs down under $100 million, it will require a well-managed and governed transformation that delivers smart, targeted investments in modern technology, streamlined processes and unified data systems. This is where my background fits in. I've spent my career leading large-scale digital transformations. I know what it takes to succeed. Starting with the customer, simplifying processes and using data and technology to take out friction and cost. I bring this lived experience to Ryman to support and test as we execute the strategy, providing governance to ensure that the technology investments deliver genuine operational savings whilst enhancing the residents' experience. We have important work ahead of us to keep turning this business around. I'm deeply committed to this iconic Kiwiborn company, and I bring both a shareholder and a customer lens to the governance table. I would greatly appreciate your support for my reelection and to keep serving the Ryman Healthcare Board. Thank you.

Thank you, Hamish. Are there any questions for Hamish or the Board concerning this resolution from shareholders in the room? Are there any questions online? Sorry, I didn't see that. Could you please make your way to the microphone? No rush, that's fine.

Barbara O'Connor from the New Zealand Shareholders' Association. And I'm really grateful to see the skills that Hamish brings. My question is can he give the time needed to help -- turn this company around when he's got five independent director roles?

Yes, that's a good question. I'll have a go at answering that because that was certainly -- and I can hand to Hamish as well -- that was certainly one of the questions that we discussed. Trying to find a person with Hamish's experience took us some time. We ran through a whole recruitment process, and we couldn't find who we wanted, then we came upon Hamish. And we're delighted that we found it all in one place. So that made it easy. But we did discuss capacity. Do you have the capacity? It's a big business. We've got a lot of work to do. But ultimately, he's a governor. He's not going to be in the business. I think that's really important. There's a clear distinction in management and governance. And what we want Hamish to do is help govern these processes. So from a capacity perspective, we spent time talking about that. He got us comfortable that with those other opportunities, a number of them are much smaller businesses than this. We felt he had the capacity to do that. But maybe, Hamish, do you have anything you'd like to add?

Look, always a really important consideration, and thanks for the question. I think to Dean's point, the Boards vary in size and commitment, and I'm 100% committed to a full-time nonexecutive career. So I can commit all my energy and time to that.

Are there any questions online?

Your first online question comes from Stephen Mayne. Could Director Hamish Rumbold and the Chair comment on the recruitment process that led to his appointment to the Board? Was a headhunter involved? Did the full Board interview Hamish as a group? And did they interview any other candidates? Did Hamish know any of our directors before engaging with the recruitment process?

Thank you, Stephen. I think as I intimated, we ran a full process with an outside recruitment agency. We interviewed three or four people that were shortlisted out of that. A subcommittee of the Board did that. We didn't think we had the right answer there, so we paused that process. And then I obviously sit on the warehouse Board and Hamish appeared there. And I actually thought to myself, actually, we've got the answer right under my nose here. So I introduced Hamish to the balance of the Board. All of the Board interviewed Hamish. I've obviously had the opportunity to watch Hamish for 3 to 4 months already at the warehouse before he had those interviews. So there was an extensive interview recruitment process. It was unsuccessful. We couldn't quite find what we had, but we're delighted when we found Hamish under another bush in another place. So whether you knew other directors, Hamish?

No, I did not know.

And that was actually the first time I've met you as well. So there's no history there apart from that. So we're delighted to have Hamish. I think that mixture of customer and technology and transformation, we found through the recruitment process it was very hard to find in one place and with governance experience. So now we're delighted.

There are no further questions online in relation to Resolution 4.

Thank you. I now propose that Hamish Rumbold be reelected a Director of the company. Thank you. Please mark your voting cards now. [Voting]

I would now like to give shareholders an opportunity to ask questions, whether related to the presentations, whether related to the financial statements or the management of the company. Between us, we will do our very best to answer these. Shareholders online can continue to provide questions through the portal, and we'll also address questions from the room. We've received some questions in advance. And given the efforts I've made, I will seek to address those first. If you are asking a question from the floor, please state your name and whether you are a shareholder or if a proxy holder, the name of the shareholder that you're representing. Please make your way to the microphone stands when asking your question so that those in the room and just as importantly, those online can hear you clearly. We also ask that you limit yourself to one question at a time so that everyone who wishes to participate has the opportunity to do so. Hayden, could we please read the pre-submitted questions from shareholders?

Your first pre-submitted question comes from Jeffrey and Kathleen Hogan. It has been some time since shareholders received a payment. What is the time frame to recommence paying dividends?

That's a very fair question. As I reported in my Chair speech and as Naomi referred to, we've publicly stated a strong intent to return to dividends in FY '28. We've indicated that they will be between 20% and 50% of our cash flow from operations. And importantly, that won't be from debt. We will not be borrowing to pay dividends as it happened in the past. So we continue with that intent, and we strongly expect to be in that position. Hayden, any other questions?

Your next pre-submitted question comes from Robert Rose. It would be nice to have some Board members that are not from property, IT or finance backgrounds. You have people on the Board and executive team from Air New Zealand, the Warehouse Group and Fletcher Building, which does not give me confidence.

It's a bit tough, James. You've just gone on the Fletcher Board trying to fix it, but 3 to 5 minutes. Look, I actually believe that it's a very good Board. I'm really delighted with what we've been able to attract. And there is a lot of diversity on the Board. I think without being rude to my Fletcher friend or my IT or property colleagues on the Board, if I looked at someone like Kate, originally trained as an aged care nurse, moved to law, having seen the light and then moved into operations, culminating and running 80 Ramsay hospitals in Australia, an enormous largest hospital fleet in Australia. So a strong care background, then moved into the Chief Executive of a listed IVF business, Virtus. So Kate brings enormous depth across aged care, care more generally and legal background. So I think she's very, very diverse. In terms of Hamish brings customer -- strong customer lens, not just IT lens, and I think that's what makes him different. Myself, I've spent half of my career in finance markets and half my career in operations, having previously run Silver Fern Farms, which is one of New Zealand's largest food processing businesses. So I think I bring a mixture of finance and operational experience. So apart from those other skills, which I do think are important, care is important, finance is important, property is important. And Paula, obviously stepping down now, but has run large-scale people teams. So I actually think the Board is well -- the shareholders are well served by the Board, and there's a lot of depth there and experience.

Your next pre-submitted question comes from Ian and Margaret. When will the next dividend be coming up?

How many of these are going to get? Same answer. We're very conscious of it. We've stated our intention of FY '28 and nothing has changed.

The next pre-submitted question comes from Andrew. The Labor Party is promoting its plan to make retirement village operators repay residents within 3 months after they depart and that this change in law would be retrospective. Could you and your team please discuss how this would impact Ryman and also its impact on the aged care sector more broadly? Would such a change result in a deterioration in Ryman's cash flow and in turn, resulting in higher debt levels?

Thank you, Andrew. I think it's important let me just set the scene in terms of what we do now. So Ryman, our current setting is to repay after 12 months or the earlier of the person moving in, and we pay interest after 6 months. That's the position in Australia. That's the proposed position by this government under legislation under review. What the Labor Party -- and we support that because it's actually in line with where we are now. What the Labor Party is proposing is something substantially different. That's repaying after 3 months of departure and doing that retrospectively to everyone who signed a contract that didn't say that. So that would be significant in a number of fronts. Effectively, every operator in New Zealand would have to buy back every person who's departing because the irony there is from a residential property, if you're selling your residential property, it's at least 6 months plus for you to sell and get money from your property. If you decided to leave, you're probably going to do the wallpaper, you probably might do the painting, replace a few bits and bobs. You're going to put it on the market, you might sign a contract and there'll probably be 3 months to settlement. So what they are proposing here is very abnormal. It's abnormal to go backwards in time. So for us, we would not support that change. And ultimately, that financial burden that they're putting on operators that doesn't exist now will ultimately come at a cost to residents. Weekly fees will have to go up. DMS will have to go up because there's no free lunch here. So I think it's a relatively narrow view of that. It's going to be the political run-up to the election. So as an organization, we think that will ultimately be at a cost to residents and also see less retirement living and aged care built, which seems to be an odd setting as the population is aging. So we're not supportive.

Your next question comes from Christopher McMillan, which relates to the recent resident incident reported on by RNZ. Can you please explain how an incident of this nature could occur and what safeguards are in place to protect residents, their property and to ensure the quality of care expected at Ryman? What actions has the company taken in response to this incident? And what additional steps will be taken to reduce the risk of similar incidents occurring in the future?

Look, this was a very unusual and distressing event. The organization has unreservedly apologized to the family. I personally apologize to the family. It's very unusual in Ryman for this to happen. The person involved with it is now an ex-employee. It fell well short of our standards. And while someone might say that's one incident with 15,000 residents, one incident is one too many. So the Board takes that very seriously. We were made aware of it immediately, and we've tasked management with reviewing and making sure that does not happen again. But to provide a little bit more detail, I'll hand over to Naomi.

Thanks, Dean. And as Dean has already said, just again, acknowledging the distress of this incident and the unreserved apology that the company has made to the person and their family involved. There are two things I'll just touch on more broadly, which is how we respond if there is a significant incident of this kind as well as what we're doing to invest in and lift our clinical governance right across the company. So in the case of a significant incident, which, as Dean mentioned, is rare, the management response is immediate. And that is everything from launching an independent review and investigation of what's occurred, reporting to regulatory authorities where we need to do that, reporting to our Board so that they can have oversight of the response, making sure we're engaging with the family to keep them informed of what's occurred. And then most importantly, the learnings that come from incidents that help us improve and prevent something similar occurring again. We have, over the last year, done very extensive across all our villages speak up training, which is about making sure all of our almost 8,000 staff not just feel comfortable and know how to raise concerns, but also see it as their responsibility to make sure the care is being provided to the standards that each of our residents should be able to expect. And similarly, we've made investments across the board in lifting our clinical governance through things like having very clear lead indicators of clinical quality and performance, having that visible across every single one of our care centers and having that seen centrally so that we can -- where we do need to provide a bit more support to villages or to individual residents or teams at different points in time, we can proactively do that. And that's all part of our response in making sure we are meeting the standards that should be expected.

So a rare event, but totally unacceptable. Do we have other questions?

Your next pre-submitted question comes from Andrew Ott. And this is a question for the auditor. I view the role of PwC as auditor of Ryman as being very important. And consequently, I do read your audit reports. My question is about your approach and reasoning in your decision and use of materiality of $30.5 million in your audit work. You have chosen net assets as the benchmark. I'm a long-term shareholder in Ryman. In my view, the most important part of Ryman's accounts is the cash flow statement. Both the directors and management do spend time in discussing Ryman's cash flow, and they now pleasingly have much greater focus on generating free cash flow. In my view, the value of Ryman's net assets is totally dependent on its ability to generate free cash flow over the long term. So from my perspective, if I was to worry about the accuracy of Ryman's accounts, my focus would be on the cash flow statement and not the book value. I may be misunderstanding your audit approach, but could you please discuss your approach to materiality and how this impacts on my focus of Ryman's cash flow and not the book value?

Sam, could I ask you to stand up, take responsibility?

First and foremost, thank you very much for that question. It's a very thoughtful one. And I'm also very pleased that I know shareholders read the financial statements, but it's also extremely pleasing as an auditor to realize the independent auditor's report also gets the time of day and is scrutinized. So the question also itself shows a genuine understanding of Ryman's business. So I do want to give it a proper answer, and I do thank you for your time. So materiality itself is a concept which is used to plan and perform the audit of the financial statements as a whole. Materiality is essentially the threshold we use to judge whether a misstatement, whether that's individually or in aggregate, could reasonably influence the economic decisions of users of the financial statements. It guides us in the nature, our timing and the extent of our audit procedures. Auditing standards allows us to choose a benchmark appropriate to the entity. For a company like Ryman, net assets is often the most stable and relevant benchmark because the balance sheet is dominated by long-lived property assets. And the net assets is a key metric, which focuses on an asset-intensive retirement village operator, but also as a shareholder, both reflects the capital and income returns that are generated. Our profit-based benchmarks or cash flows can be volatile from year-to-year, particularly given fair value movements on investment property, but also the reselling of ORA contracts. So that makes it a less stable anchor for materiality. So the use of net assets is simply the starting point for setting overall audit materiality. It certainly does not determine which parts of the financial statements receive our attention. As noted, we've set at $30.5 million in the current year. And this is what we call as our overall materiality. But in practice, we use low materiality thresholds when performing our procedures, which also affects the quantitative or the qualitative aspects of the balance we're testing. And it's certainly not only does it cover just the dollar value. I would also like to highlight that in our audit opinion for those that haven't read it, it expressly covers Ryman's statement of cash flows. So it doesn't just solely focus on the P&L or the balance sheet, which you can see on the first page of our report. I'll happily read out the opinion if that's of benefit, but that's probably about 15 or 20 minutes.

But I don't think we're going to do that.

No. Thank you. But after the meeting, if there's any other questions on the floor, I'm more than happy to talk about our audit approach to any of the shareholders.

Good question. Thanks for the answer, Sam.

There are no further pre-submitted questions online. I'll hand back to you, Dean.

Thanks, Hayden. Do we have questions in the room?

Yes. Michael, shareholder. I just noted that you've got an interest in a solar farm up north. I'm just wondering, do you have solar panels on your villages? It just seem to make sense to me to be generating the power where it's used.

It's a good point. And the answer is no, we don't have solar on our villages. But we have entered into a long-term undertaking to offtake from this solar village. And essentially that solar goes into the grid. And obviously, we don't know whether we're buying that electron or not. So we'll obviously be buying the electrons that are closest to us. But we have supported that significant build through our multiyear commitment, enough electricity to supply about 60% of our needs. So that's not our capital tied up, we've just committed long term. We did look at the alternative of putting it all on our villages, but there's lots of complications around retrofitting those onto roofs in terms of health and safety, particularly if you think what -- a lot of the stuff, we've got our biggest routes are probably on our care centers. And so that's not without risks, not without insurance issues as well. So we felt actually we're better to more quick -- it would be much more quicker just to build in one place, so we have supported that. So we did look at both. You've got weight, for one. These buildings never had their top roofs thinking they're going to be taking weight. And also you've got fire issues as well. But primarily, it's weight. They weren't designed to have weight. Other questions in the room?

It's Evan. I was wondering how is the Resident Fund? Is it by financial institute or is it by Ryman?