Ryman Healthcare Aktie

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

Welcome, everyone, and thank you for joining us for our FY '26 full year results. With me today, I have Matt Prior, our CFO; and Hayden Strickett, our Head of Investor Relations. Today, we will run through the significant progress we've made and how this is translating into improved performance. Reflecting our strategy refresh, we will talk to retirement living and then to aged care, showing the differences of these earnings streams. And we'll leave time at the end for your questions. Let's start with the highlights on Slide 4. FY '26 marks an important operational inflection point for Ryman with the work undertaken over the last 2 years now translating into improved performance, cash flow generation, and balance sheet strength. Earnings momentum is building with growth in recurring earnings and significant costs removed, we've doubled our operating EBITDAF. And for the first time in more than a decade, we delivered positive free cash flow of $188 million. This has been delivered in mixed market conditions, demonstrating the resilience and sustainability of the actions taken.

We now have a strong and flexible balance sheet with the completion of our bank refinancing during the year. This, alongside our new capital management framework and $147 million in contracted land divestments, provides Ryman with much greater resilience and flexibility through the cycle. Moving to Slide 5. Before I step into our FY '26 financial results, I want to touch on our portfolio as it stands at the end of the year. We now have only 2 sites actively under construction, lowering our exposure to inflation and construction costs and property cycles. Following the closure of 2 of our oldest villages and transfer of those residents to newer ones, we have a higher quality portfolio. Our portfolio has an average village age of less than 12 years and an average age of entry for independent residents of over 80 years, reflecting our care-centric offering. While our asset and resident base has been growing, our team member numbers remain unchanged. And as we maintain the quality of care and resident experience, we know is paramount to our future success, with a lower overhead structure.

And as we work to improve our financial performance, as you can see on Slide 6, we are equally focused on our residents and our team, improving our customer NPS scores year-on-year, continuing to win a number of industry awards, and keeping our team who enable all of this engaged through a period of change. Slide 7 gives you a performance snapshot of the year that's been. On the left, our financial performance, growing recurring earnings and cash flow and materially reducing capital spend. Retirement Living is in the middle, where we have delivered FY '26 sales in line with guidance and the building sales performance at a higher and more sustainable level of DMF. And on the right, aged care with strong occupancy, earnings growth and capital inflows.

Now starting with Retirement Living on Slide 9. As a reminder, we reset our contract terms back in October 2024. And as you can see, these changes are now embedded in the market with the deferred management fee for new residents averaging 30% and weekly fees for new residents up 63% on unit turnover. While these changes do take time to flow through the portfolio, we've done the hard yards in the market, and it's a step change that will drive a significant uplift in long-term value and sustainability.

Turning to Slide 10. You can see we now have 17% of our Retirement Living portfolio on the new weekly fees, which is predicted to grow to around half the portfolio by FY '29. And with reset pricing, we are seeing growth in both serviced and independent fees per occupied unit. This will progressively flow through the portfolio over time, driving strong growth in future recurring revenue.

On to Slide 11. As you know, our sales team have been implementing a number of initiatives to improve our sales effectiveness after having made the necessary changes in DMF and weekly fees. We've had a focus on lead quality, improving the number of contracts that converted and the number of contracts that have settled within 90 days. We have seen this flow through to improvements in net resales across all regions despite mixed market conditions. And in the last quarter of FY '26, we saw applications exceed turnover for the first time since October 2024. This is the key lead indicator we watch as we work to reduce resale stock and payouts.

Turning to Slide 12. Importantly, targeted sales and marketing has meant that these resales are coming from new residents at higher weekly fees and deferred management fees rather than internal transfers. It's the combination of these resales and new sales to new residents that will accelerate the shift in our portfolio from old to new contract terms in the coming years.

Moving to pricing on Slide 13. We continue to see a highly competitive environment in some regions with a broad range of incentives at play in the market. As part of our strategy to rebuild sales and lower the levels of stock, we are using targeted pricing with adjustments targeted at a village and individual unit level, this has led to only a modest fall in average pricing. Resale margins have continued to moderate as expected, reflecting the lower house price inflation environment of recent years. Importantly, as you can see from the cash generation chart, our pricing is converting to cash. This gives good transparency that our headline new sales metrics and our resales pricing are aligned. And we are maintaining the quality of our contract book with a stable age of entry, as I mentioned upfront, and unchanged resident tenure after having moved to a more realistic rate of DMF revenue recognition back in FY '25.

Looking at Slide 14 and our resales, you can see that the growth we had been seeing in paid-out stock has moderated with improving sales effectiveness and our pricing model changes now embedded. Our focus heading into FY '27 remains on increasing sales volumes to match turnover, growing occupancy on our new contract terms and releasing capital from paid-out stock. While our resale stock did increase last year, pleasingly, the portion that is contracted has also lifted, giving us confidence in sales catching up to turnover and reducing the vacant stock we have. As I'll talk to shortly, we also see opportunity to grow the uptake of existing and new care capital products from residents transferring from retirement living to care. This presents a meaningful opportunity with approximately half of retirement living residents moving to care at some point.

Moving to Slide 15. We have seen independent new sales volumes greater than new stock delivery over the last 4 halves now. In FY '26, you can see independent living apartment stock down 55 units and service apartment stock down 39 units. With unoccupied new sales stock value at 31 March of approximately $400 million, there remains a meaningful cash release opportunity ahead for Ryman.

Now let's look at aged care on Slide 17. We have opened 5 new care centers in the last 2 years. And over the next 3 years, we'll open 1 each year. Growing occupancy at these new care centers will be a key revenue driver for Ryman. Driven by care demand and our sales initiatives, we've seen significant uplift in occupancy in all our new care centers across FY '26, ahead of our expectations. Demonstrating the strength in care demand, you can see Keith Park in Auckland opened in August 2024, Bert Newton in Melbourne opened in November 2024, and Kevin Hickman in Christchurch opened in July 2025 have all now reached 90% occupancy.

On to Slide 18. We are seeing New Zealand premiums up underpinned by the sustained demand for our care offering. Consistent with premium trends in New Zealand, we have also seen strong growth in RADs in Australia, reflecting sustained demand for our high-quality accommodation offering and mature care centers. We know that paying for care is a significant cost for residents and families. And so we have introduced a new product we call the Resident Fund, which is exclusive to Ryman residents. It makes the transfer from retirement living to care seamless with residents taking their capital with them. This differentiates us in the market compared with care being offered under a DMF contract, which is not always a match with the needs of residents and their families when transferring to care.

And we have already seen $17 million of capital retained since the launch of the product in the second half of FY '26 with plans to further grow this in FY '27. The growing level of premium penetration across our care beds, over 80% in both Australia and New Zealand, together with high occupancy in mature villages and growing occupancy in developing villages, demonstrates we are getting our pricing and product offering right in the market.

Moving to Slide 19. You can see the benefit of the higher premiums and rate inflows into our revenue and cash flow. Revenue per bed is up 6% in New Zealand and 9% in Australia. And with only 1 new care center opening in FY '26 compared to 4 in FY '25, cash flow from care capital was steady at $81 million, a key contributor to our strong free cash flow result. Importantly, these earnings are driven by occupancy, care demand, and resident acuity rather than housing market conditions. The flexibility of our portfolio is one of Ryman's strengths. As our populations age and government policy changes increase care in the home and the acuity of residential care, the scale and flexibility of our care portfolio becomes increasingly important. During FY '26, we saw this reflected in growing demand for swing beds and hospital-level care, providing rest home care into a small but building number of service departments.

Slide 20 gives an update on the highly active policy environment as the New Zealand and Australian governments work to address the growing shortage of aged care beds. Australian reforms are in place. And in the coming year, we will start to see the benefits of the 2% per annum retention on RADs signed after 1 November, 2025. On a new incoming RAD, which in FY '26 averaged AUD 747,000, this equates to around AUD 15,000 per bed per annum. In New Zealand, the government Ministerial Advisory Group recommendations are expected in the coming weeks with a government response anticipated ahead of the New Zealand election. We expect some similarities with reforms introduced in Australia, which have supported more efficient utilization of aged care and hospital capacity.

Slide 21 updates on our progress towards the $25,000 to $30,000 operating EBITDAF per bed target we set ourselves at the Investor Day in February. For the second half of FY '26, we were at $20,200 per bed. This has helped -- this has been helped by the Australian aged care funding reforms. We expect aged care profitability to continue improving as occupancy grows across developing villages, premiums, and RADs increase and operational efficiencies continue to build and in New Zealand, as the necessary funding reforms progress. As our care earnings grow as a proportion of the group, we will continue to build a more diversified, resilient, and recurring earnings profile.

Now let's talk to development, starting with Slide 23. With a more disciplined approach to development, we have now reduced the active sites under development to 2. This materially reduces the capital intensity and risk profile of the business compared with prior years. The Richard Hadlee main buildings will open in the second half of FY '27 and Patrick Hogan in FY '28. In addition, the redesign of Hubert Opperman is progressing well, and we have recently submitted our planning permit application. The remaining stages are expected to improve the timing and recycling of capital with construction expected to start later in FY '27. These 3 main buildings represent the final ones to complete our developing villages. And together with the next 2 stages of townhouses at Patrick Hogan, represent the total capital work we view as committed at this point with an estimated total cost to go of $190 million. With this limited development activity underway and half of our FY '27 development CapEx already locked in under fixed price contracts, our exposure to cost escalation and housing market conditions is significantly reduced.

On Slide 24, you can see the significant growth in occupied units across all 10 villages with new stock delivered in the past 2 years. And it's been great to see such broad-based new sales, including in Auckland, with all of our developing villages contributing. On Slide 25, you can see we have now contracted $147 million in land sales of sites that did not meet our revised development criteria. From these sales, we have so far received a total of $72 million in cash proceeds. Following further feasibility review of the Coburg North site, we have now included this in our land bank to be sold and have increased our target for land divestments to around $250 million.

Moving to future development on Slide 26, which remains a key enabler of future growth. We have retained 5 greenfield sites in markets with enduring demand and in FY '27, we'll be prioritizing the best opportunities for future development across the portfolio. We are both mindful of the impacts of recent oversupply in the market and are anticipating there will be benefits that flow from the current market conditions with a likely moderation in development activity at the same time that demand is continuing to grow and more disciplined capital allocation across the sector. I'll now hand over to Matt to run through the financials and capital management.

Thanks, Naomi. Our key financial metrics on Slide 28 showcase a year defined by renewed momentum across the business. In an environment that continues to evolve, we have delivered strong operational performance, strengthened our balance sheet, and positioned the business for sustainable long-term growth. Today, I'm pleased to take you through the financial results and the drivers behind our performance.

Slide 29 shows our operating profit and loss, which highlights the year's revenue growth outpacing expenses. And with that discipline, a doubling of operating EBITDAF, a clear sign that our strategy is working. Operating revenue increased to 10%, supported by fee growth across aged care and retirement living as well as a 2.6% increase in the number of residents. DMF improvement was modest this year as expected due to the change in accrual recognition periods in FY '25. But as we transition to the front book of 30% DMF contracts and the legacy 20% contracts roll off, DMF revenue will accelerate and support growth in out years. Ultimately, it is the improvement in profit measures per share that underscores a year of progress. And in shifting away from non-cash underlying profit, we are better able to connect our results to cash flow.

Slide 30 breaks out our operating earnings and shows the lift in margins from strong performance in our New Zealand and Australian villages. Our transition to a clearer operating model combined with new contracts and fees, a sharper focus on care performance, and a disciplined management of non-village costs is now showing in the numbers. In New Zealand, EBITDAF margins expanded 250 basis points with steady half-on-half improvement as we tightly managed cost growth. In Australia, revenue accelerated and in the second half was up 21% from occupancy in developing villages, stronger care and village fees, and rising RAD imputed interest.

Moving to Slide 31, where I want to thank our teams for the work to deliver $57 million in gross annualized cost savings since FY '24, which is at the top end of our guidance range of $50 million to $60 million that was upgraded at the first half result. Total savings have come from reshaping our non-village functions, driving operating efficiencies across villages, and embedding stronger procurement practices. Operationally, in developing villages, we are seeing higher occupancy now flowing through to meaningful revenue growth. And in our mature villages, we are achieving margin expansion through a deliberate combination of pricing initiatives and continued cost focus. Together, these outcomes demonstrate our operating model is building momentum across the portfolio.

Slide 32 is a highlight of the result with aged care the standout contributor to our improved performance over the year. As this segment reporting is new since our first half result, this is a half-on-half comparison. And an important call out on this slide is to note that there are $75 million of support costs allocated across the 2 segments as detailed in the appendix. In the second half, revenue in care grew 7% against a 3% rise in expenses with this operating leverage equating to 32% growth in EBITDAF. EBITDAF per bed lifted 31% to just over 20,000 from higher occupancy, strong premium pricing, and better operational efficiency. Following investor feedback, we are also providing our EBITDAF per bed in each country, which for FY '26 reached NZD 15,000 in New Zealand and just over NZD 32,000 in Australia in New Zealand dollar terms. In retirement living, revenue growth remained modest as the transition to the front book continues. And while refurbishment cost reclassification affected reported EBITDAF, excluding this change, performance improved over the year.

Turning to our non-village performance on Slide 33. The charts on this slide tell the story of how we've continued to reshape our cost base with the results now becoming clearer in our numbers. Over the past 2 years, the company has moved from a regional structure to a functional operating model, and that shift, combined with cost discipline, is driving a leaner, more efficient organization. Gross non-village costs are down 25% and headcount has reduced 39% since FY '24, reflecting the structural progress we've made. A lower overhead platform gives us the flexibility to scale in line with market conditions. And to continue to drive our sales uplift, we will make near-term investments in selling and marketing capability. In the longer term, we won't stand still with improvements in systems, digital capability, and AI-driven productivity supporting a target of normalized non-village costs below $100 million by FY '29, a measurable commitment to sustaining efficiency and strengthening our margins.

Slide 34 is cash flow from existing operations with a core part of our strategy focused on growing recurring cash flow in the business. From what we have presented in the doubling of earnings, you can also see this in our cash flow from village operations, which has particular relevance to the progress against our target of $150 million improvement in sustainable CFEO by FY '29. Within CFEO, net resale cash flow was softer, reflecting a $53 million increase in bought back stock as well as a lower resale margin. Importantly, net retail receipts exclude $22 million of repaid ORAs from closed villages, which have been reclassified to CFDA, which is also where the proceeds from these land sales will be recorded. FY '26 also includes $18 million of net one-off cash costs relating to transformation, legacy payroll remediation, and other non-village items, some of which have been accrued in previous years.

Slide 35 shows cash flow from development activity as well as free cash flow. Robust new sales, moderating development spend, and our land bank divestment program drove a strong cash flow outcome for the year with CFDA increasing by over $200 million. Development CapEx reduced materially as our build program moderated with active construction sites decreasing from 7 to 2. We also saw a reduction in capitalized non-village expenses and interest, reflecting less work in progress and reduced cost capitalization. As development reduced and we completed a number of projects with contingency released, our FY '26 CapEx spend of $222 million was slightly below our guidance of $235 million. Altogether, free cash flow across both CFEO and CFDA increased by more than $280 million year-on-year, demonstrating the strength of our operating model and the benefits of disciplined capital allocation.

Turning now to capital management. On Slide 37, you can see our investment property values have increased 2%, supported by FX movements and new additions, but partly offset by fair value adjustments. I would note that there has been a material decline in the New Zealand dollar to the Australian dollar over the period, impacting asset values as well as net debt, which is shown on the following slides. Across the year, we delivered 250 new units alongside continued investment in main buildings at villages such as Kevin Hickman, Richard Hadlee and Patrick Hogan, all of which positions us for future value growth. The movement in fair value on both new and existing units reflects market conditions and our targeted price adjustments during the year.

Slide 38 shows the valuation uplift we are seeing in aged care, which is aligned with the improved financial conditions across the sector. Book values per bed increased year-on-year with New Zealand up 11% and Australia up 16% or 6% on a constant currency basis. Whilst valuation practices vary across the sector, Ryman's approach is aligned with accounting standards and our care center book values reflect land and buildings only. Despite this uplift, Australian bed values remain around 3x higher than those in New Zealand, which are well below the cost to build, highlighting the current differences in funding and the operating settings between the 2 countries. But New Zealand is well-positioned for improvement as funding reform progresses.

Slide 39 highlights that during the period, we've strengthened the balance sheet with net debt down $94 million to $1.57 billion at the end of the financial year. I'd note that the reduction in net debt is lower than our reported $188 million cash flow, largely due to currency translation, which resulted in approximately $90 million of headwind due to the strength of the Australian dollar. However, our Australian dollar assets also increased in New Zealand dollar terms, meaning that the impact from currency on our net assets is broadly neutral. Our property portfolio now sits at $12 billion. And overall, our net tangible asset value is broadly unchanged from FY '25 and stands at just over $4 billion or $4 per share. I should acknowledge that our share price is presently trading at a meaningful discount to NTA, but also note that the recent asset sales have been realized in line with their book value. Ryman's Board is very conscious of shareholder value, and it recognizes the high threshold for allocating free cash flow in consideration of capital management options.

Turning to Slide 40, which revisits the full refinancing of our $2 billion in bank facilities announced at the time of our first half result, which provided improved pricing and no bank maturities until FY '31. With $675 million of debt headroom and an industry low gearing level under 28%, we have a substantial liquidity buffer that supports disciplined growth. To maintain the diversification of our funding sources, we are also assessing options for our retail bond maturing in December. Overall, our balance sheet is resilient, flexible, and positioned to support the next phase of growth.

My final slide, Slide 41, highlights the substantial reduction in our annualized gross interest costs, down $68 million since February 2025 from the combined benefit of the equity raise, improved cost of debt and positive free cash flow. Post refinancing, our average cost of debt is now 5.9%, around 30 basis points lower than in March 2025. And with 2/3 of our interest exposure fixed over the next 2 years, we have locked in stability at a time when certainty matters. Given this, we are well-positioned to navigate the current rate cycle while continuing to strengthen the balance sheet. I'll now hand back to Naomi to talk to our strategic priorities and outlook.

Thanks, Matt. Starting on Slide 43, we set ourselves the target of making a $150 million improvement in sustainable cash flow from existing operations back at the time of the capital raise last year. We went further at the Investor Day in February this year, outlining how we would reach this target by FY '29. Today, we are reporting our achievement against this target with $47 million of improvement delivered in the first year across care, retirement living, and support services. Within our care business, we have improved occupancy, increased revenue per bed, and closely managed our costs to grow care margin. We have delivered overhead and procurement cost savings as well. The reset in revenue in retirement living takes longer to flow through to cash with the rate of turnover and tenure, particularly the reset of DMF, which in cash benefit terms largely sits beyond and in addition to the $150 million CFEO target for FY '29. We are achieving this in a subdued operating environment, giving us increased confidence in our FY '29 target.

On Slide 44, you can see our progress against our $500 million cash release target with $169 million delivered in FY '26. We have a further $75 million cash release locked in with contracted land divestments that are due to complete over the next 2 years. There is still significant opportunity for future release of cash with $420 million of unsettled new sales stock, $281 million in paid out resale stock, and a further $100 million in land sales targeted.

On to Slide 45. We talked to you at the Investor Day about how we were looking to evolve our service department offering to attract a broader customer base with flexible assisted living and care offerings. This will increase demand and accelerate uptake of the stock we have available. Demographic demand is growing, and we expect government policy settings will expand this further. However, we recognize we must evolve the product offering to accelerate uptake and ensure it matches the needs of our customers. Firstly, our Ryman Select product, in the current economic climate, we are introducing more flexible entry pathways.

At selected villages, we are offering a choice in the services residents take up so they can choose what services they need and add more later as their care requirements change. Secondly, we are piloting a Premium Care Apartment offering. This provides our residents with 24/7 clinical care in a high-end premium accommodation. Occupancy of our service apartments currently sits just below 80% on average across our mature and developing villages, and we see significant opportunity for cash release by increasing this to 95%.

Turning to Slide 46. As we talked about at the Investor Day, while we are focused on turning around the business, we are also thinking about our future and building our long-term competitive advantage. To do this, we must create a more scalable, adaptable, and digitally enabled business than we have today. Dr. Rachna Gandhi, who joined us earlier this year, has been leading this work for us, which we are calling [ One Ryman ]. You can see the value creation we are targeting on this page by returning our team's time to resident care and experience, improving our sales effectiveness, reducing administrative burden, and removing structural costs. The value of this work will extend beyond our FY '29 target time frame. And as the work progresses, we will update the market on the benefits and costs. I won't talk to the next slide. It's just there as a reminder of the strategic framework and priorities we outlined at the Investor Day in February.

Moving to the outlook on Slide 49. As you all know, with the Iran conflict yet to be resolved, the outlook has changed and uncertainty has heightened in recent months. As we did all through last year, we will be providing quarterly updates through the year, but wanted to provide an update at this point, partway through the quarter, on our most recent sales performance and what our sales teams are seeing on the ground. We have continued to see growing demand for both care and service apartments. This highlights the resilience of our care-centric offering and the diversification benefits of having around 50% of our portfolio capacity in care and assisted living. While demand for independent living is seasonal, our teams are seeing cautious customer sentiment, reflecting continued global events and housing market impacts. Year-to-date, total retirement living resales and contracts have been broadly flat on the prior corresponding period, with service apartment contracts making up a higher proportion of the mix.

We are beginning to see some fuel cost surcharges emerge, particularly in development. Importantly, with only 2 sites under construction and 50% of our development expenditure in FY '27 locked in, we are not expecting material impacts to development CapEx. We will continue to monitor and respond to the impacts on property markets and cost inflation through the year. While market conditions are uncertain, Ryman enters the year a stronger and more resilient business with prudent gearing, long-tenored debt, improved operating performance, and significantly reduced development exposure.

Our FY '27 guidance is outlined on Slide 50. In Retirement Living, we are reducing vacant stock and targeting to lift the rate of resales to match turnover by the end of the financial year. Care operating performance is expected to continue to build with increased occupancy and operating initiatives growing our EBITDAF per bed. And our build rate and capital expenditure is lower, reflecting our more disciplined approach to development.

Finishing up on Slide 51. Our focus for FY '27 is clear, cash flow generation, capital management, and growing our care earnings. We will grow our earnings from care with increased occupancy, pricing, and efficiency improvements. We will reduce vacant stock and accelerate the uptake of our service departments through our new service department offerings. We will be working to offset inflationary impacts and progressing opportunities to further reduce our operating cost base. We will continue to release cash through both our land bank divestment program and continued moderation in our development activity. We will progress our One Ryman program to build a more digitally enabled, efficient and customer-centric business for the future. And our Board will continue to assess the best use of released capital to grow shareholder value while maintaining prudent gearing and liquidity. Thank you, and I'll now open up the line for questions.

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

Thanks for your ongoing commitment to transparency, very good materials provided. Just on the refi margin outlook for FY '27, I mean, obviously, there was a 600 basis point reduction in that in '26. And you sort of talked to the early trading conditions in '27. I mean should we be sort of expecting that like within what you're sort of seeing, in sort of mid-teens looking likely at this stage for FY '27 resale margin?

Arie, thanks for the compliment on our disclosures as well. We work hard to do that. In terms of resale margin, you're right. Look, in a flat market, you would expect resale margin to moderate. I think that's well-understood. To the extent it's moderating, it is moderating at a slowing rate. So if you look at the first half result, we had a resale margin of 20.3% and now the full year we're at 19.9%. So it is slowing in terms of its rate of moderation. There are mix factors involved in that.

We've talked about Auckland before having a higher embedded resale margin and Auckland has been more subdued as a market for us during FY '26. And there's also the mix of service departments, which you can see have a lower resale margin than independent departments, and that's also a factor to the extent of recently seeing better growth in SA. I would just finish though by saying our resale margin on independents is still pretty healthy at 27%. But as you would expect in a moderating price environment, we would expect resale margin to come down, but at a moderate more slowing rate than what you've observed previously.

Yes. I mean it was that mix of service departments, which was a factor in sort of asking whether you were seeing sort of potential for mid-single-digit -- mid-double-digit, sorry, in the teens. Okay. Just on divestment proceeds, you've given a clear indication there in terms of the timing for what's contracted. In terms of where you're at on, say, sale proceeds for including those sites in Christchurch that you've closed, should we -- is it possible in '27, '28 that we'll see divestment proceeds over and above what's contracted?

Arie, yes. So in terms of the 5 sites that we've identified for divestment, we'll be progressing those sale opportunities in the coming year. The exact timing of the cash proceeds is, obviously, dependent on what gets finalized there. But I would expect us to be making progress on those divestments in the coming year, and we'll update as we go forward on that.

Yes. And then just on any intention to purchase land in the next sort of 12 to 18 months to sort of add to the land bank? Or is that not a priority for the business right now?

I think right now, our focus is really on driving the performance in the existing asset base. As we've said previously, we're very conscious of needing to re-earn the right to grow and getting our existing portfolio performing. And we are going to be doing the assessment across our development book of what are the best opportunities there. So not a focus right now on acquiring new land. But certainly, as we get further progressed on assessing what we've got on proving what we've got, that's something we want to get back to for the future, to be ready when the market conditions are more supportive.

Sure. And then just maybe a final one for me. Just turning to the comments you've made with regards the high threshold for new investments, which makes sense. But I guess just picking up a little bit more on the Board's consideration of all capital management options. I guess a couple of questions. Firstly, where would you -- where does the Board sort of see debt levels needing to get to before it might prioritize capital management over debt repayment? And then, I guess, also just on the comment regarding asset realization. I mean would it be fair to say that you haven't looked to divest anything with any substantial managers' interest at this point, so it has been more bare land valuations that you've been achieving value against from a book value sense?

Yes. Perhaps if I answer the second one first. So yes, that's right. We've really been selling undeveloped land to-date. In terms of the first one, I'd refer you, Arie, back to the couple of slides we had in our Investor Day presentation on capital management and the new capital management framework that the Board has approved. We've got a pretty clear gearing target range in that capital management framework, which we're currently sitting within. That's frame -- a target of 20% to 30% gearing. And so -- and we also, in that presentation, highlighted the range of options for use of free cash flow from reinvestment in the business, development, growth, reducing debt, return to dividends when we have positive CFCO and also the option of buybacks. So they're the options that the Board will look across, but very much be coming at that from a perspective of what is best value for shareholders.

Yes. I mean I understand that framework, but I guess there's a bit of a signal being provided in this presentation. And so, I guess, I am sort of interested like is there a level of core debt or that the business needs to get down to before capital management options would be considered, for example? Just trying to get a bit of a sense of whether those sorts of thresholds exist.

Well, what I'd say, again, is we are in our capital management framework in terms of the balance sheet gearing. And also that assets right now are trading effectively below the cost to build. So the Board are mindful of that in how they deploy free cash flow, and they'll be looking at all the options, but also doing that in the context of current market conditions.

Your next question comes from Will Twiss from Forsyth Barr.

Well done on the result. It's obviously great to see you guys targeting getting the resales volumes back in line with unit turnover by the end of FY '27. Are you able to just give us a steer of where the current resales inventory is today across villages? Is there a handful of villages with quite elevated stock? Or is it more kind of evenly spread across the portfolio?

Will, yes, I think we've previously indicated that our resales bought back stock is a bit higher in regions that are more subdued and more competitive like Auckland and lower in some of the other regions that have had stronger property market conditions. So that remains the case. When we look at our resales performance, we are getting improvement across pretty much all regions. So it's really a matter of just continuing to drive that and then get it back to eating into those stock levels. And you would have seen, in the half-on-half comparison in the pack, that moderation in stock build and in payout balance build that occurred in the second half.

Okay. Great. And then thanks for the new disclosure around the EBITDAF per bed in Australia and New Zealand. So obviously, Australia, a lot higher than New Zealand at the moment, but would just be interested in if you could give us a rough idea of what level of profitability you've assumed in Australia and New Zealand in terms of the FY '29 target that you put out in the market?

Yes. Well, we haven't given you explicit guidance in terms of the breakdown of the $20,000 to $25,000 EBITDAF per bed for FY '27. That is new guidance for us in terms of giving EBITDAF per bed range. And look, to the extent that we achieve the midpoint of that range, it would be great growth on FY '26, but we're not giving you the split between the 2 countries. But clearly, by virtue of giving you each of the countries individually, you can see where we're at and the work needing to be done. But New Zealand is a much larger part of the portfolio. So there's much more opportunity there for us to elevate EBITDAF per bed.

Well, just one thing I'll add on. Sorry. I was just going to add that New Zealand and Australia are probably going to be at different points in their reform programs in FY '29. So don't view FY '29 as that's an ending point or anything like that. I think if you think about the cost of these facilities that we're building, our facilities have probably averaged around $0.5 million a room. We do need to get better earnings through that part of the business to get an adequate return. And so that's really just a midterm target, if you like, as to where we're wanting to make sure we get to in the next couple of years.

No, that makes sense. I guess if I ask another way, just trying to understand, I guess, what level of improvement in New Zealand is baked in from the funding reforms that's currently ongoing to the FY '29 target?

So we haven't provided a breakdown, Will, of how much from different sources. We do think there will be benefit from funding reforms through that period of time. But we're equally not waiting for that. We're making sure all of the levers on our side of the fence are being addressed, and we'll continue to do that.

You can see, Will, that the occupancy uplift really is such a key part for us in New Zealand. So to the extent it's in our FY '27 outlook, it's very modest as a contributor. The real main upside in care is that occupancy component. We've had the higher acuity mix from hospital growth, as you can see in our presentation, but just getting from the 90.9% last year to now 92% this year in care occupancy drives a lot of operating leverage.

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

Congratulations on the progress in cost out, particularly. I'd also like to echo Arie's comments on Ryman's disclosure, which is excellent and sector leading. Just first question on the trading comments. I just wanted to touch on the comment that the resales are steady so far in FY '27. You didn't comment on new sales. So last year, Ryman had a couple of large blocks completing in the first half '26 from memory, which helped boost new sales in the first half. Would it be fair to assume, that just given the macro backdrop, that new sales are tracking lower so far in FY '27 relative to last year and that total sales are also tracking below last year?

Stephen, so yes, you're right. The new sales are going to have a different profile because of the build rate. And as we've signaled, the build rate is moderating. New sales will moderate with that. And new sales are also quite lumpy based on timing of stage releases and building openings and things like that. So we've separated the resales out because that really gives the best like-for-like indication of performance that we wanted to provide. But new sales is much more connected with the build rate and as we continue to sell down through the stock we have.

I agree with separating that out just a year ago, you talked to total sales, of course. So it's just a bit of a change in how you're signaling there. That's fine. And then just, I guess, secondly, in terms of the target you've got for [ market ] resales to termination rates by the end of the year. You signaled an increase in marketing spend to support that, which is kind of new to me. Can you give a rough outline of the quantum of spending? And is this something that's already started to happen in the first half? Has this been activated? Or is this a plan for later in the year that, that will be rolled out, if you like?

Stephen, so in our segment disclosure at the back, you can see we break out marketing individually, and it's around $20 million in terms of total spend across the group in FY '26. In the non-village component, it's about $6 million, again, looking back at the appendices and the disclosure we provided. We're not giving kind of an explicit quantum increase in FY '27. We're trying to be directionally helpful. It's obviously linked to us driving our resale performance over the course of the year. And to the extent you would see, it is over both halves. It's something that we're looking to move on given the significance and the importance of our resale performance.

I just presume it's material, though, for you to call it out. And I guess the -- just to be clear as well, just move under that, is that simply brand spend going up? Or does it also led to perhaps increasing incentives?

So we're not going to break down the composition of the increase other than it's just across sales and marketing effectiveness. And the marketing effectiveness piece is the one that I'd index more to across those 2 elements.

Understood. Okay. And then one last one for me. Just in terms of the land bank. So we've seen Coburg North added to the for-sale bucket since the Investor Day, which is perhaps not a huge surprise given it's a small intensive site, it was perhaps more of a surprise to see it still in the development bucket in February. I mean I guess how committed is Ryman to the 5 greenfield sites still in the development land bank and particularly the more intensive sites at Essendon, Ringwood East, and Takapuna. I mean just noting, obviously, seeing a lot of build cost inflation, housing markets a bit tougher, like the economics of those developments would be looking tougher, not better since February. Just any comments you can provide there, please?

So we've -- you might remember at Investor Day, Richard Stephenson had just started with us, at his first week. He's been in the business now for 3 months. I think from the fact we've appointed someone to that role, we're clearly signaling that we do want to continue to develop. But one of the things for Richard in his first year is to, really, form a view on exactly your question, Stephen. And it's probably fair to say that there's a bit of redesign in how we look at those sites to get a better outcome than we might have done in previous developments. So that's something we'll be able to update on later in the year as that work progresses.

Your next question comes from Bianca Murphy from UBS.

Firstly, just on free cash flow. So that improvement to $188 million, could you help us bridge how much of that is structural compared to cyclical? So particularly because of lower near-term development and we have some land sales in there. So could you provide any color on normalized free cash flow in the medium- to long-term?

Good question, Bianca. So I think about it more in the context of CFEO being that recurring component of cash generation for the business. CFDA, I think we're being relatively explicit on in terms of our disclosure. The more important element is probably the linkage to the $47 million in achieved CFEO improvement towards our $150 million target. So I'm not answering your question directly. But to the extent that the components are split across the village operating component of CFEO and the non-village component of CFEO with some changes in our one-offs on non-recurring costs, I think that's quite an explicit guide to our calculation of the $47 million achieved in the year. To the extent you can see our progress against the $500 million target. And to your question, I think our exposure is pretty explicit. Most of our growth in EBITDAF and cash flow during the year came from care to the components of CFDA that came from land sales and other, I think it's relatively explicit in the pack.

Okay. That's helpful. And then just on the valuation discount applied to unsold stock, could you just talk about the risk of further write-downs if sales velocity doesn't improve as expected?

Sorry, can you say that again, Bianca? Sorry, you just garbled with it.

So on Slide 37 of the presentation, you talk about the valuation discounts applied to unsold stock. And I was just wondering if you can talk to the risk of further write-downs if sales velocity doesn't improve for the year as you expect?

Yes. Sorry, Bianca, I've got you now. So across our villages, the independent valuer does have regard to villages where there's unsold stock and applies a discount within their valuation for the level of unsold stock. And so to the extent that you can sell down unsold stock in those villages, it alleviates that discount and you get an improvement or a buffer to our valuation. So I think there's just an intuitive linkage there to performance and our valuation in terms of the unsold stock discount. But to the extent, to your point, if it's reversed, if there's a greater degree of unsold stock, the value would have regard to that in terms of the same discount.

Okay. And then lastly, just on guidance. So you provided guidance on build and CapEx, but not on sales volumes this year, whereas you did last year. So just wondering if that's reflecting more limited visibility on demand given ongoing macro uncertainty? Or if that's -- yes, just how you're thinking about guidance going forward?

Yes. We're conscious, Bianca, of just that level of uncertainty. We also, were the only one in the market putting out guidance. And so given we've moved to the quarterly reporting, the combination of those things has meant that we think the right answer is to be clear on what we're looking to achieve through the year and then update you each quarter as we go into the year.

Your next question comes from Nick Mar from Macquarie.

Just in terms of the FY '27 sales cadence to-date, can you just provide some more context around how you're thinking about that? Obviously, the sort of fourth quarter seemed like it was tracking up given you're saying it was meeting terminations. Can you just talk through how much of a sort of seasonal impact there usually is in that sort of first quarter versus the fourth quarter? And also given it's sort of flat, I think the first quarter of '26 is probably a pretty easy comp given you're just sort of getting through some of the changes. So just some context around whether you think that's a sort of good starting point or a bad starting point for the FY '27 year. Yes.

Thanks, Nick. So look, seasonality is definitely a factor. The fourth quarter is typically a reasonably strong into the year. and we certainly saw that through last year. April can be a mixed month. We had 2 long weekends. We had some pretty adverse weather in Wellington. So we saw all of those things impact sales through April as would often occur. And I think as we head on through the quarter into sort of a more normal trading period, the guidance is, as we've sort of indicated to you, that we are seeing overall similar levels, but definitely stronger on the service assisted living side than on the independent side. Some regions stronger than others. Wellington, for instance, has probably been a weaker region through the start of the year. But these things can be fairly lumpy. So we don't want to equally overstate only sort of 1.5 quarters in where we're at, and we'll make sure we update that at the end of the quarter.

That's good. And then in terms of the commentary around getting to sort of covering terminations by the year-end, how much do you think terminations will grow over the year as the portfolio matures?

Yes. So Nick, we gave in the back of the pack, the F '26 number, which was 1,237 turnovers in FY '26. So to the extent that you'd expect that number may be slightly higher in FY '27 as the portfolio matures.

That's good. And then the combination of the sort of mix of what you're selling, i.e., selling buyback stock and the sort of time to complete sales, as you've alluded to, has been improving. Even if you didn't achieve the sort of full coverage, do you think you can work through some of the buyback stock on a net basis given the mix of what you're selling?

I think we're definitely focused on both, if you like, absolute stock numbers and buyback levels, Nick. So I would say that's got -- that both have got equal focus and we'll be looking at how we can continue to manage what has been historic growth in that through this year, even in more challenging potential property conditions.

Okay. And then just in terms of mature villages, you've given the sort of EBITDAF number, which is somewhat helpful. I know sort of from the village accounts, there'll be more color once those come out. But do you have any number around what you think the mature village yield on valuations are?

No, Nick. So we're not giving a yield measure at this stage. It's a long-term target for us beyond FY '29. And it's RV only, as you know, and really sensitive to that front book roll-forward effect. There's a lot of value within the front book to roll forward, but it does take time. So it is something that's really FY '29 and beyond in terms of an ambition. Our focus really in the near-term is our 2 targets, the $150 million and the $500 million. That's the focus of management in the near-term that we're getting after. But we'll certainly think on our level of disclosure going forward to the extent there's opportunities to provide that level for your question.

There are no further phone questions at this time. I'll now hand over to Hayden Strickett to address any webcast questions.

We have one web price question from [ David Townshien ]. Why are Ryman staffing levels, which represent a large operational expense compared to Ryman's competitors far above the industry average? Is there a plan to review this?

Thanks, David. So we think about village performance through a margin lens rather than an absolute cost lens. We obviously have a greater weighting towards care in our villages compared to others, and we're seeing that swing as well towards higher acuity within care. So the business benefits from occupancy. And as we continue to increase occupancy, optimize our costs and our rostering, we are very focused on managing that. We are also in Australia, meeting care minutes, which is a great outcome with the reforms that have happened there. So as you see that occupancy growth, as you see the changes that have occurred in pricing and funding reforms and continuing work to manage the cost side, we'd expect that all to flow through to margin inflation.

There are no further questions online. I'll pass back to Naomi.

Thanks, everyone, for joining us today. Just to wrap up, we enter FY '27 with a significantly stronger and more resilient business than we were operating 2 years ago. Our focus remains on growing recurring earnings, generating sustainable cash flow, and allocating capital with discipline. New Zealand government reforms are well underway. And importantly, demand for our care offering continues to be driven by demographic and clinical need. The momentum we've seen in FY '26 gives us confidence in the pathway towards our FY '29 targets. Thanks for joining us today.

And welcome, everyone. Thank you for joining us today. It's great to see so many of you here, including many investors who've traveled from Australia. This morning, some of you visited our William Sanders Retirement Village located in Devonport, just across the harbor from Auckland CBD. William Sanders is a great example of a vertical high-density village in a metro location, which has filled quickly since opening in 2019, with strong demand from people wanting to stay in the Devonport area.

As you toured the village, you will have seen our continuum of care model in action. From independent and serviced apartments to the care center, providing respite, hospital and specialist dementia care, all in the one location. Hopefully, you saw firsthand the commitment of our team that they have to caring for our residents and how much our residents value the choice, support and community they experience living in a Ryman village.

For those not able to make today's tour, we have included a link in the presentation to a short video of William Sanders and its residents to give you a glimpse of that special Ryman Village experience. Having had the opportunity this morning to visit one of our villages, this afternoon's presentation will be more financially focused. We will introduce our refreshed strategy and the financial drivers underpinning it.

This will demonstrate our near-term focus on growing recurring earnings, how we will approach the range of portfolio growth opportunities we have across the business. And as we committed to do at this time last year, we will update you on our new capital management framework and dividend policy. With me today, I have the Ryman management team. This is essentially a new team with the right capabilities and skills to execute and deliver on our refreshed strategy.

As you'll see today, we have evolved the team to how they operate, and they have already delivered a number of the key initiatives driving the bottom line. On stage with me, I have Matt Prior, our Chief Financial Officer, who leads our finance and procurement teams. Matt joined Ryman in 2025 and brings the capital markets and health care experience needed to drive improved financial performance. Rick Davies serves as Ryman's Chief Customer Officer with responsibility for sales and marketing.

Since joining Ryman in 2019 as Chief Technology and Innovation Officer, Rick has played a key role in strengthening the organization's technology, innovation and data capabilities with his portfolio later expanding to include customer sales and marketing functions. Marsha Cadman, our Chief Operating Officer, leads our village and care operations across New Zealand and Australia.

Marsha rejoined Ryman in 2024 and brings deep experience leading large-scale operational performance transformation across complex asset-intensive organizations. Also in the room are Di Walsh, our Chief People and Safety Officer, who is leading our workforce transformation; and Marie Bonnemaison, our Chief of Transformation and Corporate Development. Marie joined Ryman in 2024 and is responsible for driving the company's transformation strategy and corporate development to drive long-term value creation.

I'm also pleased today to introduce Richard Stephenson, who has just joined our team this week as our new Chief Development and Property Officer. Richard brings deep sector experience with over 20 years in property development and asset management in the retirement living and aged care sectors in New Zealand and Australia.

Finally, I'd like to introduce Dr. Rachna Gandhi. Rachna has recently joined Ryman's senior executive team as Chief Enterprise Strategy Systems and Governance Officer, to lead the design of our enterprise-wide operating model, processes and systems over the coming year. She brings expertise in enterprise transformation, digital strategy and AI-enabled innovation with significant experience leading change in regulated environments.

Looking at the agenda for today. Following my quick overview of our business and an introduction to the refreshed strategy, I'm pleased to welcome Cam Ansell, Managing Director of Ansell Strategic, who will present on the future of aged care and retirement living. Ansell Strategic operates in New Zealand and Australia and advises aged care operators, investors and governments on strategy, investment and performance improvement.

Rick and Marsha will then talk to our plans to improve our sales effectiveness and operational performance. After a break, I will run through our approach to portfolio growth, and Matt will talk through the new capital management framework and dividend policy. We encourage you to question our entire team on everything we talk about in the 3 Q&A sessions as well as the breaks we have today.

We will be doing our best to keep the time, so can I ask that you save your questions for these times. After I wrap up at the end of today, our Chair, Dean Hamilton, will share a few words on the Board's perspective. Dean and Scott Pritchard, another of our directors, will join us for the drinks following the conclusion of the presentations. James Miller is also here with us today for the first part of the presentations.

Ryman has a clear plan to deliver value for both shareholders and residents. And there are 6 key messages to take away from today. Our strategy refresh is focused on growing our recurring earnings, optimizing the over $12 billion property portfolio we own today and getting back to value-creative portfolio growth. Ryman's portfolio is uniquely placed with flexible capacity to meet the most strongly growing areas of demand in care and assisted living.

We are targeting $150 million in sustainable cash flow improvement by FY '29, the top end of our previously announced target range with growing occupancy, reset pricing and cost efficiency initiatives. We expect strong cash generation through the release of at least $500 million by FY '29, with key levers, including $800 million of new and paid out resale stock and at least $200 million from identified land sales following the completion of the land bank review.

We have significant optionality for how we grow in the future with over 2,500 units and beds in uncommitted developments and market demand and care capacity in our existing villages to support higher return brownfield expansion. Moving forward, we have a new capital management framework, which alongside a reset balance sheet will underpin a return to dividends from FY '28 and a disciplined approach to investing shareholder capital and growing shareholder returns.

Let's start with a brief introduction for those investors new to Ryman. I won't go into great detail on these slides as many of you are familiar with our business, but it's worth spending 5 minutes on as the continuum of care model is central to our refreshed strategy. We offer integrated retirement living and care at each of our villages, providing homes to over 15,000 residents today. And the true continuum we offer attracts residents with an older average entry age compared to others in the sector.

Ryman is a household name in New Zealand, and we've built that brand recognition in Victoria with the investments made. Our customer ratings lead the sector, reflected in the awards we continue to win. Ryman led the industry in developing the continuum of care model in New Zealand. The concept was a resident-focused approach to meeting changing needs through aging at a single location, providing a home for life.

Today, we operate 3 distinct products: independent living, serviced apartments and residential aged care with increasing levels of service along the continuum as customer needs change. We have a sizable property portfolio valued at $12 billion, comprising large sites with scale to support this range of product choices at each site.

Our retirement living portfolio includes 1-, 2- and 3-bedroom independent villas and apartments as well as serviced apartments, which are typically situated in our main buildings in the heart of the village. Also situated within our main buildings are our care centers, which offer multiple levels of care from low acuity rest time or respite care through to hospital, dementia and palliative care. On average, our villages have 300 to 400 residents each.

And the efficiency this scale brings enables us to provide a different level of choice and service to our residents and is a key source of value you will hear us reference through the presentation. Our revenue model sits across this continuum for our customers and property footprint. Matt will step through in detail how the model generates a return later in the presentation.

Here, I would like to highlight that in simple terms, capital gains from property drives returns on the left-hand side in retirement living and margin on services drive returns on the right-hand side. As Cam will talk to shortly, the market is increasingly shifting to more assisted living and higher acuity care.

As this plays out, we see significant opportunity to differentiate our retirement living offering and increased revenue from services right across the portfolio. While we have operated in the past 3 distinct products across the continuum, we have the ability to adjust the level of service we provide, not just across the villages, but for each individual resident.

This ability to flex and adapt our portfolio will become increasingly important in the future. As well as having this industry-leading value proposition for our residents, we have scale. We are the largest operator in both retirement living and aged care in New Zealand and can offer residents a genuine continuum of care at all of our locations. In just 12 years since entering the Victorian market, we have built an established platform with scale.

In a market with significantly lower retirement living penetration than New Zealand, we are the only provider of scale in Victoria, offering fully integrated retirement, assisted living and all levels of aged care at each of our villages. It's well documented that there will be rapid growth in the oldest age groups with the 80-plus market expected to double by 2050.

And those in the older demographic group more likely to seek integrated living and care. You'll hear more about this shortly. So pulling it all together, the Ryman difference that sets us apart is our scale and the opportunity this creates for significant operating efficiency and to offer more choice and better service for our residents, our continuum of care model, driving lifetime value and stable occupancy, our premium locations, modern design, build quality and integrated care facilities, underpinning enduring demand and long-term asset value.

Our One Move proposition with flexibility for residents to move across the village as their needs change, and these differentiators will only strengthen as demographic tailwinds accelerate and demand for integrated living and care increases. So with that context, let's now step into the refreshed strategy. It's important that our refreshed strategy builds on the elements that have been key to Ryman's past success and addresses the drivers of poor financial performance in more recent years.

It builds on our high-quality integrated retirement living and care portfolio, which I just spoke to. 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 need to address what has got in the way of 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 larger and larger portfolio of development projects. At one point, having 16 projects on the go with a combined total development cost of over $4 billion, targeting a 15% year-on-year increase in underlying profit underpinned by development.

Non-village costs grew faster than resident numbers and the company had not scaled its systems and processes 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 visible. You have heard and will be reminded today of the decisive action the new Board and management have taken to address these factors.

Learning from our past, our refresh strategy involves a shift in focus. From the past central focus on rapid growth through development that relied on capital gains to create value to one that focuses on sustainable value creation. This change involves growing high-quality recurring earnings from both retirement living and care, fully utilizing the capacity we have already invested in and optimizing the portfolio based on growing demand, evolving customer preferences and future potential capital growth.

We continue to see development as a key part of our future growth. But going forward, we're going to do things differently. A more disciplined selection of sites and markets with enduring demand, an outsourced variable cost developer model, a product mix to best meet the evolving needs of customers and a disciplined approach to returns. Our refreshed strategy combines doing the basics well with evolving our model for how the market has and is changing.

Our first strategic pillar is to be the provider of choice in care-centric living for the growing 80-plus market, especially in assisted living and care, which is the fastest-growing part of the market and where we already have a strong competitive advantage. The second pillar of growing recurring earnings focuses on unlocking value through the reset of pricing, operational excellence and growing occupancy.

This is about ensuring we have a business that can generate reliable growth in recurring earnings. The third pillar focuses on optimizing the portfolio for value, allocating capital to grow returns and reducing capital intensity. This is about ensuring our portfolio meets the evolving needs of customers and our shareholders realize the benefit of capital appreciation over time.

Lastly, we will get back to value-creating portfolio growth, which remains a key opportunity for long-term shareholder returns. This is a strategy to deliver industry-leading customer satisfaction and grow total shareholder returns through growth in high-quality recurring earnings alongside sustainable dividends and active portfolio management and investment, maximizing capital gains from our sizable property portfolio over time.

Over the last 18 months, there has necessarily been a tactical focus on resetting the business. We have reset revenue by changing contract terms, reset the balance sheet to have the lowest gearing in the sector and long-dated debt funding are now through reporting changes, which have created transparent financial performance and for the first time in over a decade, delivered positive free cash flow. We have turned the corner.

And now with our refreshed strategy, our focus expands to unlocking business potential and optimizing our portfolio for value. This will enable us to shift our focus over the next 3 years increasingly towards sustainable growth that delivers long-term value. We will get back to portfolio growth, but we'll do it at the right time, having addressed the operational performance of the business, which has not had enough attention, not just at Ryman, but across the industry.

While our near-term focus is on resetting the business we have today, we are also thinking and looking longer term. And this year, we are starting work to design and build our future operating model. Since 2010, which is when we have really solid data, we have provided homes and services to more than 50,000 Kiwis and Australians.

This history and scale gives us access to the deep insight needed to continually evolve our offering in line with changing customer expectations and to build a flexible and adaptable operating model that can anticipate and move with future changes in the workforce, regulatory and funding regimes and the range of emerging digital opportunities. We're already using data and insights extensively across the business.

And as we reset and optimize the portfolio, there's significant value and competitive advantage to unlock as highlighted on this slide, with early wins helping to fund the investment needed in systems and processes. Scale matters in this industry, and it's going to matter more in the future. We see that in the industry consolidation trends already underway in Australia.

As we move through the turnaround of the business we have today, our focus will increasingly turn to how we build competitive advantage into our operating model and leverage our scale, keeping our residents and their needs at the center of what we do. In summary, we have a high-quality portfolio of assets, industry-leading resident experience and quality of care that sets us apart.

We are reearning the right to grow with improved financial performance and operational performance. We are changing our focus from the speed of growth to the quality of growth and ensuring that we grow in a way that is value accretive. As Cam will talk to now, we are well positioned to leverage our scale and care-centric customer proposition in the fastest-growing parts of the market.

That's a good point to hand over to Cam, who is going to talk to the future of aged care and retirement living.

As we're starting to cover already today, the aged care and retirement living sectors are about to go into their biggest period of change, the most exciting time in the history for both our countries. We always knew that this massive increase in the number of older people were going to come through the system.

We didn't know what political and economic environment it might land on. I'm going to go through a series of the key elements influencing aged care and retirement living in Australia and New Zealand today. And it's going to allow us to arrive at a projection about what the world might look like as the baby boomer generation comes through.

Critical and most important when we consider the different elements influencing it is, of course, the customer. And we've focused very much on the sheer number of people coming through the system. We've known that we'd have a doubling of the number of the key target market of the 80-year-olds plus. But perhaps the most exciting component of what's changing for us is not the number of people, but the character of those people. They're not homogenous.

And so you can see there at the bottom there, the builder generation in orange being replaced by that big baby boomer generation. And then frighteningly my generation, Generation X after it, keeping us busy from 2040 onwards. The nature of those changing consumers are probably more influential than their pure numbers. The consumers themselves, those customers that we've worked with, those that we've largely built our models on have been the builder generation.

And the builder generation have been somewhat conservative. They've lived through world wars, depressions, and they're somewhat accepting of the services that we've made available to them. They have been somewhat grateful. They're replaced now by a new generation of consumers that are not grateful. It's the baby boomer generation. they are the architects of consumer choice.

Their expectations and the likelihood that we can just put them in the jam jars of services that we have historically made available to them is very limited. The builder generation in Australia received about 95% of their direct aged care costs free. About 2/3 of Kiwis get their direct residential aged care costs free as well. The combination of that very changing demographic and the reality that they're going to have to pay for more of their services themselves is going to be a massive influence on what we deliver going forward.

Their capacity to be able to make contributions and their ability to be able to buy what it is that they want is demonstrated the builder and remaining builder and baby boomer generations represents less than 1/3 of the populations of Australia and New Zealand. but they control most of both countries' wealth. And so their buying power, their ability to be able to match their very high expectations with their financial means will be a major influence on the services that we provide going forward.

And while we've always known that this huge gray tsunami was coming, the supply is hopelessly behind in order to meet it. In Australia, from about 2016 with the 2016 budget and around about 2010 for New Zealand, we slowed down in supply and the building of residential aged care beds, rest home beds in New Zealand, nursing home beds in Australia. And so that slowdown comes in the face of what's just started to emerge massively as an increase in demand.

So in Australia, for example, we required about 10,000 new beds to be built last year. We've got about 803. Kiwi has almost built as many, although they were predominantly Aura beds. And so the number of beds that we can build now can't possibly catch up with the number of older Australians and Kiwis that will come through the system. Home care supply could be an option. And so providing services to people out in the suburbs is often seen as the great solution.

The couple of challenges that we have there is the baby boomer generation and X behind them didn't really have enough children for us to be able to supply the labor for us to live long time in our homes in the suburbs. Also, the rational system for New Zealand and Australia means that we're falling hopelessly behind in terms of need already.

So in Australia, there's over 100,000 people that have been assessed as needing home care services still waiting for them. There's another 100,000 people waiting to get on that wait list. And so the challenge associated with people getting their home care services out in the suburbs will continue, particularly as that demographic change lands on us. has a major impact then on our health dynamics.

If you look at the rest of the world, the developed world and OECD countries that capture their long-term care data, you can see that a very large proportion of Australians, in particular, aged over 80 end up in residential aged care. And their length of stay tends to be relatively long. And that's partly because Australia has been a little bit immature in the development of its home care services.

We're about 10 years behind the Kiwis with their aging at home policy. And so we've tended to have too many people end up in residential aged care in Australia, and they stay there for too long. And so what will need to happen as we're seeing the hospitals in both sides of the ditch start to fill up with older people who need to be discharged into aged care.

We'll find that our residential aged care services will be reserved for people with very high levels of functional dependence, higher acuity and challenging behaviors. And we will find -- need to find other places for older people to age gracefully. We also need to be very careful about how we manage our scarce resources. I mentioned that we didn't have enough children to be able to provide services for us out in the suburbs.

A critical one for that is our clinicians, our GPs and in particularly in aged care, our nurses. We can do the very best that we can. That green line is a projection there on how many nurses do we expect to get year-on-year coming through the system. The orange line is the proportion of those nurses to older people, older Australians and Kiwis. And so no matter what happens because of the changing demographics, we're not going to have enough clinicians available to be able to deliver services moving forward.

In these circumstances, it's going to require more older people to be in areas of close proximity where we can allocate our scarce clinical resources to their care needs, enabling them to age safely. The economics also force another major change already in Australia, but coming shortly in New Zealand.

So for all of the things that have happened in Australia in recent times, we went through the ABC report. We had a Royal Commission through COVID and then the findings of the Royal Commission and now a new act introduced in November last year. Of everything that takes place in that massive act, the single greatest change in all of that was around needs testing.

The contribution now required for those people entering home care or residential aged care in Australia will have a major impact on people's decisions moving forward. No matter which way we look at it, the changing dynamics and the shortening of the number of people available to make tax contributions to our care means that increasingly, we're going to have to pay for more of this stuff ourselves.

And the combination of the baby boomer generation having very high expectations and the need for us to make greater contributions ourselves means that the quality of our care services and the flexibility of it need to improve all the time. The other element of the reform progress is that we tend to find an injection of new funds when we realize that a sector has been underresourced.

On your left, you'll see the relationship between financial performance in recent years. You can see that 2023, when the government introduced the reform agendas recommended by the Royal Commission, it came with an injection of funding. On your right, you can see that New Zealand also under-resourced in terms of aged residential care is about to be moving into the reform program.

So we can anticipate that there will be a short-term improvement. But no matter which way I spin this, it's very hard for me to come up with a solution that makes a stand-alone rest home work in New Zealand or an aged care facility to work in Australia. And so more and more, we'll be looking at alternatives to be able to provide services to this huge number of people coming through the system.

Those dependency ratios I mentioned before, back for the Australians, the release of the first intergenerational report by the Productivity Commission, we knew that at that stage, we had approximately 6 taxpayers for every older Australian, similar numbers you can see there when we analyze that for New Zealand. And when the baby boomers hit their straps, that drops to about half.

So half the number of people available to make contributions to our services. And so that tightening, that dependency ratio means that our contributions need to grow all the time. That reform program then becomes absolutely critical. I mentioned we started with the Royal Commission, a new Aged Care Act, means testing.

Also for Australia, terrific improvements in terms of accommodation revenues, the refundable accommodation deposits increased from 550 to 750 and the reintroduction of retentions where providers can take a recurring amount for 5 years of the RAD contributions.

Again, it's really good, and it's positive, and that's been really good for those existing operators. Naomi mentioned the level of consolidation and investment appetite in Australia at the moment for residential aged care services. It is primarily around investment in existing services. There's a lot of development going on. For New Zealand, I mentioned that we're at the earlier part of that transition.

We can expect that in that reform process, there'll be some replication of what's happening in Australia. We're hoping that we have an independent pricing authority to make sure that pricing is more sustainable moving forward. We hope that there are better subsidies for supported residents. And we do expect that there'll be an injection of government funding to help encourage new development, but also to help facilitate a reduction of pressure off the hospitals and into the aged care system.

So what does it all this mean? This combination of these different influences descending upon us all at the same time. I've spoken today about different components of aged care. I've spoken about retirement living, about aged residential care and about home care. And Naomi is introducing more and more of this continuum care model. In our view that the continuum of care is likely to be the most important future for village operators moving forward.

It is the assisted living piece that will become increasingly important from where we go in the future. If we project that into the future, then we expect to see that the demand that we've talked about today is going to be met in these 4 key areas. The first at the top there is residential aged care, nursing homes, rest home, a combination of the red line there that is government funded and the yellow line, which is privately funded high care services.

Projections around this that it will increase in line with the growing population. But for the reasons I've explained today, we can't get the supply to catch up with the aging population. The bottom line is retirement living, and this is retirement living that offers retirement living solutions.

Our view is not the same as most village operators would recommend is that will go up in line with the growing population. I think the changing market means that the baby boomer generation and then us, all busily pretending that we're not getting older, we'll find it harder and less interesting to go into villages where most of the people are older people, unless it provides some level of support.

And for that reason, it is that green area in the middle the assisted living service, which will become the greatest and most exciting and most dynamic area of services, which will enable us to be able to provide services for that massive number of older people coming through the system. And as the largest provider of those integrated services in New Zealand and soon in Australia. Ryman finds itself in an enviable position to be able to leverage that model and expand it moving forward into that demand. Thanks, Naomi.

Thank you, Cam. We now have around 10 minutes for a few questions.

If you can please wait for the roving mics before you ask your question, and I'll moderate the Q&A questions on each of the sessions. So if you direct your questions to me, and I'll make sure I hand it to the right person. As Hayden mentioned earlier, please start with your name and organization. Do we have any questions at this stage on the first part of the presentation?

Yes. Maybe just on the EBITDA per bed sort of metrics. I think it's sort of $15,000 to $25,000 to $30,000. Is there some benefit from aged care reform backed into those targets or is that sort of potentially upside?

Can we come back to that Stephen? Because we're going to talk to Ryman specific targets shortly in Marsha's session, and I will make sure we have another Q&A session at the end of that to make sure we're clear on how we've built that up. But certainly, as Cam's talked too, he's presenting the industry-wide position right now and what you see in New Zealand is that very low level of profitability today that isn't sustainable and that we expect will form the basis for a reset in the coming years. So happy to come back to how we see that playing out specifically in the next session.

Sorry, sorry to introduce myself, Stephen Ridgewell, Craigs Investment Partners. Maybe just on the industry changes and Naomi. And if we're sort of talking about -- there is a review on at the moment, what would be the top 3 things that you think the industry would like to see in terms of change to the funding model that specifically Ryan would like to see in the next sort of 12, 24 months?

Yes, we've had a lot of opportunity as an industry to engage with government. And so we think there's a good understanding of that. One of the first ones is evidence based pricing. That's been a shift in Australia, we have brought the experts from Australia over to build a sector-wide pricing model to provide to the government and help inform the basis for future pricing decisions.

Another is the evolution of how the funding works in terms of what is paid for by government, what is paid for by the consumer. In a way, the government is letting the industry front that at the moment in needing to supplement charges with the charges that come through daily premiums and DMF on ORAs. So it's a really important part of the reforms and part of the work that the Ministerial Advisory Group are doing to look at what that change in funding who pays how we make that an equitable model.

And that is a key part of the MAG's mandate over the next 6 months. There's some near-term things that we're encouraging the government to focus in on. We know that right now today in New Zealand as well as in Australia, there is bed blockage in the public hospital system that is something that the aged care sector can assist with. And what's needed for that is some different arrangements to how respite care and shorter stay care work and so we see that as a near-term priority even outside of the reforms that will need to be legislated.

And probably the final one I'd mention, I could probably go on for longer on this, but the final one I'd mention is just in the provision of home care. Today, the government has been -- it's mixed across the country, but has been taking a direction towards bulk funding and single contracts in regions. And it's really important that retirement village operators are able to provide care to their own residents. So that's a very active dialogue at the moment as well with Health NZ, Te Whatu Ora.

It's Oliver from New Zealand Shareholders Association. Just to extend the question slightly, and you talked about the potential for government reform here in New Zealand. Given that we had an election later this year, to what extent have you got cross-party political support for some of the physicians that you're advocating for?

Thanks, Oliver. Look, I think that there's great cross-party support to address aged care funding in New Zealand. I think we're through that stage. I think everyone understands the need for that. And we're now at the point of talking about the how. How do we make that reform effective? How do we make it sustainable long term? And then how do we work through that with the community and with the population?

So in Australia, when those reforms went through, we saw them go through with bipartisan support. That was an important part of those long-term reforms here in New Zealand, the Ministerial Advisory Group, the government has been set up. Has been established jointly by Minister Brown and Minister Costello. So that's 2 or 3 and is very much seeking active engagement with the labor party as well.

So I'm hopeful and positive that we will ultimately have a bipartisan solution. And that hopefully, this is one of the first reforms that whatever the outcome from the election we have in New Zealand later this year, it's one of the first reforms that comes to the new parliament.

Shane Solly from Harbour. You talk about value-creating portfolio growth. Can you just expand a little bit on that? What are the sort of the key indicators we should be looking at as investors that would show that?

Thanks, Shane. And we are definitely going to come back to this later in the day and in the development section to talk about and capital management sections to talk about specific metrics. But at the bottom line, we -- whether we're extending the existing portfolio for investment or through greenfield sites. We want to be able to see a clear line of sight to shareholder value, which ultimately means cash flow.

And so that's where we've obviously made the shift towards more cash-oriented metrics to really understand business performance and are making sure we're testing and looking at each part of our portfolio, both to be performing at the level of the assets we have today should be performing at as well as when we're adding to that being confident that the additional assets that we are investing and are going to add to the portfolio.

And ultimately, that's got to be on a shareholder returns per share basis. So -- but we'll come back to the metrics more specifically later in the presentation.

All right. I might wrap up this first round of Q&A. There will be plenty of time for more through the day.

But now I would like to invite Rick Davies, Chief Customer Officer, to talk to you about how we are improving our sales effectiveness.

Thanks, Naomi, and hello, everyone. I'm Rick Davies, Chief Customer Officer based at Ryman's head office in Christchurch. My role covers sales, marketing and pricing with a particular focus on our retirement living offering. I'm going to talk today about our focus on improving sales effectiveness, and we'll go through both our approach and the progress we are making.

Now I'm sure you'll all appreciate that the detail around our sales strategies are commercially sensitive. So there will be specifics I can't speak to today, but I will provide insight into our overall approach and progress.

As Naomi mentioned earlier, Ryman has some significant scale in New Zealand and Victoria for our continuum of care proposition. And the strength of our value proposition is best demonstrated in our mature villages with 94% of our independent units and 87% of our service apartments currently occupied. Our resales opportunity, matching resales with resident turnover rates sits across the stock.

Our developing villages sit at lower occupancy rates, reflecting the supply increase that occurs when a village opens and the time required to establish itself in a new catchment. As you see in this chart, accelerating the sell-down rates of our new serviced apartment stock currently at 57% occupancy presents a significant opportunity as we look ahead.

Aged care occupancy sits with our Chief Operating Officer, Marsha Cadman, and she will talk to this in her update. Before we get into sales strategy, I'll briefly touch on our recent third quarter sales update, which we announced to market in mid-January. We delivered a solid quarter, maintaining momentum through to the holiday period, mixed housing market conditions and with heightened competition in some regions. New sales of independent units softened after the strong uplift from our new Nellie Melba stage release the prior quarter.

New sales of service departments were strong, with Auckland delivering its best quarter in 3 years due to targeted efforts where village stock is concentrated. Resales were steady overall, albeit still mix at a regional level. While resales volumes are not yet where we need them to be, importantly, these sales are now at a much higher value DMF. Growing resale volumes is a key focus for us and something I'll talk to shortly.

Another key point I'd call out is that our FY '26 figures and particularly Q3, have the contribution from residents who have relocated from Margaret Stoddart and Woodcote to our other Christchurch villages. Ryman made the decision to close the care centers of these villages late last year. And since then, we have supported the transition of almost all independent residents to other Christchurch villages. These transfers are expected to number around 40 for the full year, which we have excluded from our full year sales guidance of 1,300 to 1,400 or sales on retirement village units. This guidance is unchanged.

Looking more broadly at our sales drivers, the external housing market remains a key influence on our sales with most new residents needing to sell their own home before moving into a Ryman village. Market conditions remain variable by region. Positively, we are seeing a recovery in Victoria gather momentum, along with some regions in New Zealand. However, the Auckland market remains subdued.

Despite these varied conditions, we do have sales momentum building in all regions. And as the Auckland market recovers, we are well placed to capitalize on this with 1/3 of our portfolio located in Auckland. Our focus remains firmly on driving sales effectiveness, and we are busy improving our sales strategy and insights, bolstering team capabilities and sharpening our tactics at a village level.

Our actions over the last 12 months have delivered measurable impact. Our contract book is now of high quality. Sales cycle times are reducing and lead to contract conversion rates are improving. Our marketing capabilities to target and engage prospective residents, leveraging technology are also improving. Marketing messages are becoming more relevant, often tailored toward a specific catchment, product type and audience profile. Investments and team capability have gathered pace, and we've built strength in our internal pricing expertise, along with customer nurture specialists, product research and design and sales training programs to improve our frontline sales performance.

Ensuring our product offer meets the expectations of today and tomorrow's retirees is critically important to us. Efforts are underway to broaden the market appeal of our service departments, which I will talk to shortly. It remains a heightened competitive environment, particularly in Auckland. We're active in ensuring our own competitiveness and we monitor and set our sales incentives and tactics at a village level to suit local requirements. Underpinning our sales effectiveness program are comprehensive data and insights that are helping us diagnose areas for improvement and target our investments where it's most effective. Every stage of our sales funnel is measured and monitored for performance.

The past 12 months have seen us focus on the mid-funnel stages in this chart as we have successfully embedded our new pricing terms. Booking and appointment with a sales adviser is a high-quality indicator of a customer's likelihood to progress. As once they experience our beautiful villages firsthand, their propensity to buy significantly increases.

Our sales advisers are now equipped with a broad range of tools that we have developed over the last 12 months to drive sales conversion. Tools vary by village depending on the specific needs of each local market, but can include pricing and sales incentives, broader marketing options and community engagement support.

Looking ahead, our focus is shifting to the top and bottom of this funnel as we seek to grow the quality of inquiries coming in, the volume of quality inquiries coming in and better support contracted customers once they have made a decision to purchase.

We expect to further reduce cancellation rates this year by better assisting customers and navigating this late stage of the journey, such as downsizing and selling their own home. The sales cycle can be long for many, often over a year given the significance of the decision for a retiree.

Over the last 12 months, we are seeing the time taken from inquiry to settlement reducing as a result of the focus on the sales funnel performance. We have developed a comprehensive pricing framework, which we use to set prices at a unit level. This framework considers the market demand of its surrounding communities and layers in a range of factors, including unit type, unit quality, competitiveness and sales velocity amongst others. Flexible pricing is now available for all new customers. While our standard prices are based on a 30% DMF, we offer flexible pricing by adjusting the sticker price with the associated DMF rate. This ensures our product offers are more adaptive to a customer's financial capacity and preferences without compromising value for Ryman.

Various experiments are underway across our portfolio, including price elasticity testing, which target occupancy improvements and lead price testing for generating inquiry. Looking ahead, pricing will remain an important lever as we seek to substantially reduce our available stock. Comprehensive governance reporting and oversight is in place at Ryman to ensure this is exercised in a way that maximizes value for Ryman over the long term. Every resident departure is a new sales opportunity for Ryman with each new vacancy a chance to reset weekly fee levels, commence DMF accrual and unlock capital gain. Our goal is to sustainably trade at resale levels that match vacancy rates, regardless of the external market conditions.

As you can see from the top chart, we have an opportunity to generate cash as we converge the blue and orange lines and as we do, reduce the volume of paid out vacant resale stock. Reducing the days for a new customer to settle helps avoid growth in paid out stock. And as the bottom chart shows, we are seeing improvement here with days from contract signing to settlement now under 100 days. As our village portfolio matures, vacancy volumes will slowly grow, increasing the opportunity in front of us. As we have seen throughout Ryman's history, as vacancy rates step up, our resale volumes follow soon after. There is often a lag between a vacancy emerging and settling a new customer. In challenging external housing markets, this lag can grow as we've seen over the last 3 years.

Through our sales effectiveness program, we expect to make good progress in closing the gap this year. It's worth noting that while an increase in contracting rates is required to sustainably close this gap, this gap can also close through lowering cancellation rates on the existing contract book. Through our efforts to improve the resident movement experience, we expect we can further reduce cancellation rates this year. To put context on the size of the resales turnover gap, we are seeking to close based on year-to-date training in FY '26, we would need just the equivalent of one more sale each quarter at each of our resales villages. We're confident we'll close this gap. It's worth noting that the New Zealand government recently announced their intention with the proposed reform of the Retirement Villages Act with the most significant change being a proposal to mandate operator buyback of vacated units within a maximum of 12 months. Ryman already meets this requirement and has done throughout its history.

In October 2024, we lifted our weekly fees and deferred management fees to better support the premium proposition we provide and to ensure Ryman's costs are covered into the future. While there is no doubt that this along with other organizational changes at that time slowed sales, these changes were critical for creating long-term value in the portfolio. With these changes now successfully embedded, the long-term benefit will significantly outweigh the short-term pain of this change. Weekly fees for incoming residents to our independent units are on average 67% higher than outgoing residents. Similarly, the average DMF for new residents has seen a 39% increase year-on-year. This slide demonstrates the significant value to be released when our back book and front book -- between our back book and front book as our portfolio rolls onto new contract terms. With a turnover rate of around 12% per annum, half the portfolio will be on new terms by FY '29.

Looking ahead, vacancy rates determine where our sales strategies are most active. And as you'll see in this chart, service departments at our developing villages present a significant opportunity in the near term. Ryman's service departments have long provided a convenient option for those needing additional services such as cleaning or meals, or perhaps wanting to be closer to the village amenities. We now have approximately 2,800 service apartments in our portfolio with over 400 units added in the last couple of years. The time taken to sell down this stock at a new village can take over 3 years due to the limited tenure of existing independent residents at that time and the service department products appealing to a more narrower needs-based market.

With 43% of service departments vacant in developing villages, we believe that diversifying the appeal of this product to a broader audience with more resident choice in their required services will accelerate this opportunity and improve sell-down rates from historical norms. We are exploring 3 opportunities to evolve our service department proposition and drive up demand and occupancy rates. Our first opportunity is in creating greater resident choice and the services a resident wishes to receive and in turn, lowering the barrier to entry with regards to price. This trial will test customer choice and allow those wanting a lighter touch experience to enjoy service department living at a lower cost while expanding their service selection as their needs and preferences change.

Secondly, we know there is a market for those wanting service department living with the assurance that they don't have to move again when their need for specialist aged care services increase. Adapting our service apartments for flexibility, allowing these residents to age in place will increase the appeal of the product to both existing residents and new customers. Our third opportunity is in converting a selection of our service apartments into modern, spacious premium care suites with those with the financial capacity and preference for premium experiences can enjoy full aged care services from the comfort of these high-quality apartments. These 3 opportunities will be tested in a targeted way that ensures the right product and value mix is achieved. Work is well underway, and we look forward to testing these changes out this year at selected villages.

This slide highlights the significant opportunity we have in new sales stock and paid out resale stock. That's why our focus on lifting occupancy and sharpening our sales performance really matters. Today, we have over 1,300 vacant units. Around 1,000 of these are either brand new or have already been paid out to their departing resident. Together, these units represent an opportunity to release around $800 million of cash back into the business. The level of paid out stock is influenced by several factors, including housing market conditions, resident transfers, sales performance and our historic 6-month buyback approach. Releasing cash from this stock will require the resales turnover gap to sustainably close and will also benefit from efforts to reduce our unit refurbishment time frames. As the housing market improves, particularly in Auckland, this opportunity naturally becomes easier to unlock. But we're not waiting for external conditions to improve. Our sales effectiveness program targets this opportunity and is underway in earnest.

So to conclude on a few key messages. We are accelerating performance improvement through our comprehensive sales effectiveness program supported by a recovering property market. While many sales effectiveness initiatives are already delivering improvement, we have a significant program still to come. Our pricing changes are successfully embedded and improving conversion rates demonstrate our ability to sell effectively on the new terms. Service departments are a significant near-term lever with diversification of the offer set to accelerate and unlock meaningful cash flow. The $800 million of new and paid out resale stock is a substantial opportunity for cash release, and I'm confident we can get after a significant portion of this by the end of FY '29, supported by our broader target of $500 million of capital release. Our sales and marketing improvements will build sustained resale momentum, reduced vacant stock, release cash and accelerate long-term value for shareholders.

Thank you, and I will now hand over to Marsha, who will talk to operational excellence.

Thanks, Rick. Good afternoon, everybody. I'm Marsha Cadman, the Chief Operating Officer. I first joined Ryman as Chief Sales and Marketing Officer in mid-2021, and I left the company in early 2023 and returned less than a year later. In doing so, it didn't take me long to be energized at the once-in-a-lifetime opportunity that we have to lead this company's transformation.

When I walk into our villages, I consistently hear our residents say, "Your village is the best village" or how they wish they had done this sooner or how their staff are the best staff. I was recently forwarded an e-mail from a daughter whose father has passed in special care. Here are some excerpts from that to give you a sense of what is happening in our villages every day. Throughout those final week, we came to see the joy, fun, laughter, care that occurs in special care unit. All of the staff are professional and positive and so caring of the residents. The residents themselves are just a wonderful mix of personalities, the same as in any community, and they take care of each other and of us at times. Thank you for this special unit. It was a difficult time of our life but it is one that we have precious memories of. What we didn't fully appreciate is how much laughter and caring occurs upstairs within that special community.

Moments like these are made possible through our unique investment in the continuum of care in all of our villages and our focus on well-being, not just care. With the impending doubling of the population -- 80-plus population and the shift from retirement living to assisted living, our continuum of care is becoming increasingly sought after. Dementia is now the #1 cause of death in Australia. Over the coming years, more and more of our residents will have higher acuity and increased care requirements.

Having highlighted what makes Ryman unique, I'd like to turn to operational excellence and how we will build on our differentiators to unlock our full potential. Many of you will have visited friends or family at various care facilities across Australia and New Zealand. What is immediately clear is that the quality of both the facility and the care very significantly. Our residents age in one place with the assurance that they have the care and the support they will need in familiar surroundings with familiar friends and familiar team members.

Our expert clinical teams on site are supported by a dedicated clinical and resident services team, ensuring on the ground insight, combined with expert oversight. This means they and their families have access to the assistance, information and advice to make the choice -- the right choices as care and clinical needs change. This investment in the quality of our care is just part of the reason we are industry-leading with the experience we offer our residents. A wider commitment to resident well-being is a more holistic approach to the concept of care, and our residents tell me that they have a bigger life since they moved into one of our villages. Whether it is the gardens, our award-winning AAA programs, the social activities, resident workshops, craft activities, carefully curated menus, happy hours, ballet classes, choirs, balls, croquet, aquarobics, walking clubs. I could go on, but there are opportunities for every resident to engage, ensuring the social connection that is essential for living.

Finally, the passion and enthusiasm of our skilled and energized teams and the amazing work that they do alongside our residents on a day-to-day basis is reflected in the resident feedback and the family feedback that is evidence that our team continues to deliver on the founder's philosophy of good enough for mum or dad. Our refreshed strategy will look to maintain and reinforce these critical attributes, which are the backbone to Ryman's competitive advantage.

With that context, I want to talk about the opportunities to leverage this foundation. First and foremost, our operational focus will be on building occupancy in our developing villages to mature village levels. Second, we'll optimize our assets through sustainable increases in room premiums and in resident capital through turnover and better use of our range of accommodation options for highest value. And finally, our targeted efficiency initiatives, which are already bearing fruit will continue to drive costs out of the business.

First, occupancy. Rick shared this slide earlier, focusing on retirement living occupancy. I now want to focus on care center occupancy. Occupancy across our mature beds is consistently above 95%, what is generally accepted as full occupancy across the industry. With the requirement for residential aged care driven by need, often an urgent health-related trigger and shorter tenures than retirement living, occupancy can fluctuate. With careful and active management, 36 of our villages have maintained 96% and above occupancy in the first 6 months of this financial year. In fact, just this morning, 26 of our mature villages have less than 5 beds available.

As you know, we have grown our portfolio significantly over the past 18 months, investing in 5 new care centers, which added another 440 beds. In these developing villages, we see a lower level of occupancy as they fill. By lifting these developing care centers, the levels in our mature villages, we can unlock an additional $26 million of revenue. Pleasingly, we are quickly building up the level of occupancy in these new care centers and attracting strong premiums in New Zealand and RADs, refundable accommodation deposits, in Australia, which will bring significant revenue growth. In our care facilities, wages remain the main variable cost. So as we fill this capacity and maintain consistent mature level occupancy, we will see strong care margin growth.

Premiums are another important opportunity for us. The daily accommodation premium or premium room fee that is paid above the New Zealand government funded care fee for the quality of the accommodation Ryman provides. We have seen this premium grow, reflecting continued demand for the accommodation our residents enjoy. A greater focus on regularly reviewing and increasing these premiums without impacting occupancy further maximizes this opportunity. It also reflects the traditional market preference in New Zealand, particularly evident in nonresident prospects and their families for paying a premium over a capital payment. We continue to see strong demand for premiums from these customers across all of our New Zealand villages.

All of this means that as our developing villages fill with residents on new premiums that are higher than the current average, we will see meaningful growth. We have seen some of our peers in New Zealand opt for an ORA model for care rather than accepting premiums. Ryman has chosen to continue to offer premiums across our mature and our developing villages as we believe it reduces tenure risk and supports high occupancy. We remain flexible to options that will increase capital into care, and I'll shortly touch on the resident fund that we have recently introduced in New Zealand.

In Australia, RADs are the market preference for paying for care, and as a capital product, involve a lump sum payment that a resident pays when entering residential aged care. Like premiums in New Zealand, we have similarly seen strong growth in Australia. This is being driven by new residents, representing higher RADs than existing residents and also a more structured approach to reviewing pricing as the regulatory framework allows in Australia and reflecting the premium nature of our rooms. We take a targeted and tiered approach to ensure we can price rooms within each village with different features that suit different resident preferences. For example, at our newest Australian village, Bert Newton, the most recent RAD sold vary from $795,000 to just a touch over $1 million. In addition, we are able to provide the families with a combination of a RADs premium combo.

As I mentioned, we have recently responded to interest from our existing residents seeking to leverage their ORA capital from their retirement living accommodation when they transition into care in our New Zealand villages. Our new resident fund allows residents to pay for their care with the equity from their retirement village unit. We piloted this product in H1 with really encouraging take-up. We moved quickly and launched it across all New Zealand villages just before Christmas. We think the resident fund is quite innovative in the market and better supports residents and their families as they consider a move into care at what can be an incredibly stressful and difficult time.

In the example on the screen, one of our residents, let's call her Mrs. Vance, moved into an independent living apartment worth $500,000. After a decade with us, her care needs have evolved, and she and her and her family have decided for her to move into aged care. As our independent apartment sales, Ryman receives $150,000 of DMF, and she chooses to have the remaining $350,000 of equity directly transferred into her resident fund. With this, she receives a discount on the daily accommodation premium, and the remainder of the cost is debited directly from the fund. This not only gives Mrs. Vance choice, but streamlines her move into care for her and her family. We are confident this offering will encourage increased movement into care due to the ease for residents like Mrs. Vance to pay for their care as their needs change.

For Ryman, in addition to encouraging more movement into care means we retain the capital and thereby reduce our interest costs. We see even more opportunity with this product offering and believe the resident fund will provide optionality for residents to pay for care and extra services by a deferred payment into the future.

Across the organization, there is a laser focus on driving cost efficiencies in our support functions, procurement and our operations. For FY '26, we are targeting between $50 million to $60 million of cost savings. Reducing our cost structure and support services has included moving away from a regional and executive senior management structure to a functional structure. This has removed duplication across senior roles and business units in areas such as human resources, marketing, sales, finance and in operations. We are centralizing purchasing and procurement. This investment has identified savings across key cost categories such as food, medical products and consumables.

Rethinking our approach to some asset classes has also released value. Shifting to a lease model for our vehicles will deliver savings, more efficient management of our fleet and also improvements in the quality of these vehicles. We are continuing to work through the entire supply chain and are enjoying working with our partners to achieve efficiencies across the board.

Finally, we are identifying operating savings within our villages by focusing our teams on identifying opportunities to drive down costs. For example, our contract with our waste provider in New Zealand will deliver savings but also has commitments to work together to reduce waste volumes across our village network. As mentioned, major aged care reforms have been implemented in Australia, while New Zealand is still in design mode. In Australia, the government covers clinical care costs while accommodation and nonclinical costs are means tested, shifting both funding certainty and consumer expectations. Key financial metrics are now locked in, including RAD retentions of 2% per annum on new agreements from November 2025 and twice yearly indexation of daily accommodation payments.

The Support at Home home care program is a major system shift designed to reduce wait list for aged care and keep people supported in the community longer. From an operational perspective, implementation of the reforms is complete across our Australian business, and we have progressed in meeting the new aged, the new care minutes requirements. Importantly, the Australian experience gives us positive evidence on pricing, workforce impacts and system behavior, not just policy intent.

In contrast, New Zealand has just entered a formal review phase, and while slower to start, the timing difference and a strong commitment from government creates an opportunity to move more quickly from this point into design and implementation, drawing directly from the Australian learnings and avoiding early implementation risks. The Independent Ministerial Advisory Group will recommend changes before the 2026 election for a more sustainable, long-term funding model, with government already indicating an ambitious implementation and reform program commencing in 2027. The policy direction signals alignment with Australia with intent to leverage learnings from the Australian reforms rather than start from scratch. Early indications suggest a case mix approach, supporting both higher acuity residential care alongside expanded home care in the home. There may also be interim funding changes as early as this calendar year, particularly to relieve pressure on hospital beds.

In summary, putting this all together, through the combination of filling vacant capacity, growth in premiums and RADs, our new resident fund, efficiency gains as well as funding reforms, we are targeting a meaningful lift in aged care EBITDA per bed from $15,000 to $25,000 to $35,000 per bed by FY '29. Matt will talk further to these key targets shortly.

Before I hand back to Naomi, I want to mention an example of what sets Ryman apart. The continued focus on creating holistic resident experience that is unparalleled in our sector. Up until recently, Ryman had a well-embedded annual tradition of giving every resident a Christmas present. But we have now shifted to involving residents in the art of giving at this special time of year. This image is one of our Australian residents who participated in this project called RizeUp, where residents shop for more than 760 different items and toys using gift cards provided by Ryman. These were then wrapped, gifted to the charity and 230 children and 20 moms who spent Christmas in refuges in Victoria received the gifts.

In New Zealand, a similar partnership with Catalytic Foundation's Christmas Shoebox Project meant more than 1,200 children received something special, selected and carefully wrapped by our residents last Christmas. These projects, which may appear small, do create opportunities for our residents to engage in largely meaningful ways, connected and creating contribution to their social well-being and connection while removing costs for resident gifts that did not fully enhance the lives of our residents. In the words of one resident, it makes our Christmas even more special. We want them to know they're not alone, and we think of them, and we want to share with them, share our Christmas joy.

As you've heard today, operational excellence will allow us to unlock significant value for the business. High-quality care, resident experience and engagement of our teams across villages will continue to be at the core of our strategy. There is a substantial opportunity to lift our care margin from increased occupancy and care premium accommodation pricing. Our laser focus on cost reduction is driving decreases in costs by FY '29. And as government policy evolves to meet rapidly growing demand, our flexible operating model would be a key competitive advantage. With all this, we are targeting a significant increase in aged care profitability.

Thank you. I'd now like to hand back to Naomi to facilitate our Q&A.

Thanks to Rick and Marsha, who've spoken on the existing portfolio and how we will grow recurring earnings and release cash. We've now got 10 minutes for questions on the first presentations we've had today. Do we have any questions? Arie?

Just a couple of questions. Firstly, just on the service department and the initiatives there to drive occupancy. Can you just sort of talk to your confidence in your ability to sustain efficiency and not give up margin by providing more flexibility to residents? And I guess on the care suites and then the premium care offering and serviced apartments, were there any meaningful investments sort of anticipated around that offering?

Thanks, Arie. I'll pass to Marsha. It's a key part of how we're looking to build flexibility into the model and really how we structure our workforce around that. A lot of our serviced apartment focus, though, is focused on speeding up the rate at which we fill that capacity, particularly in our developing villages where a number of those units are. And that still provides us with the shorter turnover time frame we have on serviced apartments, time to continue to optimize the use long term. So we don't get one go at it. We can do it continually. But I'll pass to Marsha just to talk specifically to your question around how do we adjust the cost to match the variable service and flexibility we're building in.

Yes. Thanks, Naomi. Thanks, Arie. I think a couple of key things here. One is we are already offering rest home and some hospital level care into our serviced apartments. This is more on a case-by-case basis and flexibly across our portfolio. What we can do is a more targeted increase in that approach on a proportionate basis in our villages. So there are more rooms that we can do that in. So we see a real opportunity to effectively use the cost base that's sitting in the care center to extend that care into the serviced apartment with a marginal impact, substantive marginal impact. So we're looking forward to doing more of that.

I think separately, there's also the opportunity to go in the other direction, as Rick talked to, be able to have people move in, live independently without having that requirement for a higher level of care and reduce some of the packaging that we do currently with serviced apartments where we offer a very set menu of selection and give them flexibility, whether that's hospitality services such as linen, cleaning, towels, or whether that's getting further support through higher level care needs and particularly as New Zealand follows Australia and moving into a more flexible model in terms of how care is provided and how acuity is assessed.

Yes. And then just one other question. The guidance on the EBITDAF per bed was useful. I mean, while accepted duration is longer in terms of ultimately turning around the performance, the weight of capital is in your RV offering. So just any comment on where the EBITDAF per unit, which was the equivalent there was just over $4,000 at first half '26, what your targets are for EBITDAF per unit and the RV part of the offering for FY '29?

So we're going to come back, Arie, to how we think about returns in retirement living because you're right, they are different in terms of the capital and the return profile. So if you can hold that over to Matt session, I am conscious that Stephen asked about what's in the '25 to '30? And we haven't built that apart, obviously, in today's presentation. We do see government acting in that time frame because we see the necessity for government to act. If you look what's already appearing in the public hospital system in New Zealand and the cost of a public hospital bed close to $2,000 a day compared to the cost of an aged care bed, which today at government-funded rates is around $300 a day.

So even with addressed sustainable funding, there is significant value in having people in aged care capacity where they can be properly cared for in aged care capacity and having our public health system and hospitals available to meet the most acute care needs. That's what will drive that shift in government funding. It is an FY '29 target. And part of what through the presentation today I think you'll see is while we have these 2 very integrated businesses in a single location, that contribute value to each other. We have to also pull apart and think about them financially differently from a valuation lens, from a financial performance lens. And so that's giving you the frame to do that, but we'll come back and talk to returns that we need to target through the RV side of the business in the capital management session.

Nick Mar from Macquarie. Just on the resident fund model, could you just talk through how you determine the pricing for the discount, whether it's on an imputed interest rate or something like that. And how it sort of differs from, I guess, the RAD model you're offering before where there's sort of a capital piece for a discounted or no daily premium charge?

Sure. I might pass that one, Nick, to Matt.

Thanks, Nick. So there is an imputed interest calculation you can see in the example we've provided on the slide. We gave you the interest rates down the very bottom of the slide in the footnote, and you can use that against the other factors in terms of the example of the residual equity that the residents using in the resident fund to calculate both the premium and the interest.

[indiscernible] from the RAD model.

It is, the accounting treatment is more akin to a RAD model, but I won't get into the accounting treatment today, and we're yet to report on a half which has the resident fund product in it, which we will do at full year.

And just to come back, the rationale is really to make that move seamless for a resident when they are needing to go into care and give them choice. So it should be -- our aim is to make it economically neutral for Ryman, but to open up the range of ways that residents can pay for care. And as people are asked to pay for more of their care over time, giving more options, particularly around how you use capital to pay for care is going to be important for that because a lot of our customer base, they might be asset-rich, but they might be cash flow liquidity poor. And so we're really trying to help give them solutions and make that seamless when that transition needs to occur.

Stephen Ridgewell, Craigs Investment Partners. Naomi, I just wanted to go back to the gap between resales turnover and unit resales, which is in the earlier part of this session. And it's been good to see that gap obviously has been narrowing, but there is still a reasonable gap there. Can you give us an indication of when, from the CEO chair, you'd like to see those 2 lines meet and essentially at some point, they should cross over and unit resale should be ahead of turnover. And then the second part of the question is, what other things in the toolkit could you use to accelerate that? Because it does seem like it was a little bit slow in the third quarter, perhaps where we might have been hoping that gap closing.

Thanks, Stephen. And I'll ask -- I'll pass to Rick to answer the second part of the question. But look, from my perspective, obviously, the answer is as soon as possible in terms of closing the gap. One of the things to be mindful of is just the journey that our residents typically come on from the point they're first thinking about moving into retirement living to coming in to signing a contract, on average, 6 months later, moving into a village. It's quite a long time frame often 1 to 2 years. And so all those things that we're doing across the village to improve the funnel, really take time to do that.

I'll just ask Rick to talk to specifically how we focused on chasing that down in FY '27. And then we might need to wrap up for time.

Thanks, Naomi Thanks, Stephen. Yes. The gap is clearly a very key focus for us this year, and it's not just from time to time, the gap will already close, but we're looking to sustainably close it, and that is that converting those lines. We've got measurable performance improvements that we can see in that sales funnel. And to Naomi's point, due to the natural sales cycle time, many of those benefits that we can see and measure today will take some time to flow through their full benefit as we see those inquiries playing that year-long cycle out before they sign up and then move in. So we can see the improvements. We know it's closing the gap. We're very confident we can close the gap, and that remains our key focus this year.

Okay. I think that's all the time we have just right now for Q&A. We will have another longer Q&A session. So for those who didn't get to, we'll make sure there's an opportunity then.

As part of our refreshed value-focused strategy, we are looking at the full range of options for portfolio growth. And in the next section, I'll take you through how we're assessing opportunities across our developing villages, mature villages and land bank before handing back to Matt to talk to capital management.

We have a mix of opportunities on both sides of the Tasman with a range of scale and complexity. From our developing villages where we have uncommitted stages, and the flexibility to align development with demand to our mature villages where we've already invested in village centers and care capacity that have high and proven market demand and potential to expand. To our greenfield sites where we have reassessed feasibility across our land bank to identify those sites most prospective for future development and those unlikely to be developed where divestment offers better value for shareholders. And while M&A is not a focus at present, there may be opportunities in the future as we see consolidation occurring across the industry. We will continue to monitor corporate activity across both retirement living and aged care on both sides of the Tasman.

In 6 of our developing villages, we have made the decision to pause later stages and to phase the timing of development of those stages in line with demand. In all but one of these villages, the main buildings are now complete or soon to be complete. We've shifted from programmatic development to phasing development based on market demand. This approach has reduced capital spend and supports our focus on reducing stock and improving capital efficiency. Before committing to later stages, we will ensure earlier stages are well sold and priced to deliver strong returns on subsequent stages. We expect the next stages of Patrick Hogan and Northwood to be progressed in FY '27 after strong sales at both villages in the last 6 months.

Construction of the main buildings and next stages at Hubert Opperman are also due to start in FY '27. And this will be the first project we deliver under the new outsourced model. In the past, the organization had a primary focus on greenfield development and the reported new build rate. This has meant we haven't had a focus on how we can grow within and around our existing footprint, where we already have proven demand, established pricing and existing care and village infrastructure. This makes the risk profile and capital intensity lower for brownfield developments compared to greenfield. We know that in our existing villages, around 30% of the care residents on average come from within the village. This means we have significant capacity to support more retirement living with priority access to care at these sites.

More than half our villages have very high occupancy or wait list for independent living, indicating that demand to support expansion exists. These opportunities are weighted to New Zealand where our portfolio is more mature. And almost 1/3 of the portfolio is in catchments with medium house prices above $1 million, which is where high-density vertical village economics can work. An example of one of these brownfield development options is our Grace Joel Village located in St. Heliers in Auckland, an affluent area, our village occupies a hilltop position with panoramic views of the beautiful Hauraki Gulf and Rangitoto. This opportunity is at an early stage and is one we are looking to prioritize.

Over the last 5 years, we've seen average occupancy of over 90% and strong property values in this catchment area with medium house prices of around $1.7 million. If you look at the picture on the right-hand side of the slide, you will see the 6,300 square meters of land we own adjacent to our existing village. Estimates suggest that for a project cost of between $120 million to $160 million, we could add an additional 96 units in a unique and irreplaceable location. We are mindful of surrounding competition and market conditions in Auckland as we further progress assessment of this opportunity and potential timing of it in the coming year.

Moving now to our greenfield land bank. We have completed our review to identify sites, which will be retained for future development. When assessing these sites, we have reevaluated feasibility on a site-by-site basis, considering the current outlook for demand, house prices, surrounding competition and future capital growth potential. In addition, we are reviewing our village designs, including product mix, unit layouts and finishes and the form of our main buildings. We expect to continue evolving these designs before these projects are committed. As an outcome, we have retained 6 high-quality sites for potential future greenfield development, 4 in metro locations, which can support vertical higher density development; and 2 lower density, more broad acre developments, 60% of the retained greenfield land bank unit count is in Australia, where retirement living has a lower level of penetration and better care profitability, making it more attractive at present.

Over the course of FY '27, we will be focused on prioritizing the best of these greenfield sites to move to a more advanced stage of planning, and have the potential option to upgrade the quality of our $194 million land bank as this progresses. At the time of the half year results in November, we confirmed that we had contracted land bank sales totaling $110 million. Following the completion of our land bank review, we have identified further sites for divestment and are now targeting at least $200 million in cash release in total from land divestments. This includes Kealba, Kohimarama, Rolleston, and Rolleston greenfield sites, as well as our Hornby and Riccarton sites, which following the closure of care and transfer of almost all residents to other villages, we expect to become available in the future.

Based on work to date, one of our most prospective sites, greenfield sites, is Essendon in Melbourne. This site offers 3 hectares of land in close proximity to Melbourne CBD and is permitted for aged care and retirement living. We know from our Raelene Boyle Village less than 10 minutes away that there is a strong level of demand and limited supply in this area, and see this as a prime location for future development. I won't spend long on this slide as it pulls together the range of development options, which we have just discussed. While we won't be putting a state on the ground tomorrow on new projects, Richard's mandate will be to prioritize the best options across the portfolio with significant flexibility to build in line with demand.

So putting it all together, we have over 2,500 units and beds in identified and uncommitted developments. Our review has found that we have market demand and key capacity to support higher return brownfield expansion in more than half of Ryman's existing villages. We are retaining 6 land bank sites and currently see Australia as more attractive for greenfield investments and New Zealand for brownfield expansion. We are targeting at least $200 million from land sales and have already contracted $110 million of this to date. And we see development as a key part of our future, and an important part of Richard's mandate coming into the business will be to advance our plans for the best opportunities for both greenfield and brownfield growth across the portfolio.

Now I'll hand to Matt to present on our new capital management framework and dividend policy that underpins the refreshed strategy.

Thanks, Naomi. I want to start my section with a value lens, recapping how the business makes a return, which I appreciate is not always easy in a sector with complex accounting. So I'm making the complex simple for Ryman, it starts with high-quality recurring revenues that are, by their nature, consistent through our economic cycles. The earnings from our daily and weekly fees across retirement living and aged care are net of our cost to provide these services. And at the half year result, we talked to the importance of the front book. And historically, our fees hadn't kept pace with costs, which is evident in our past results. We are now addressing both the pricing of our fees and also our cost base, which I'll talk to more in the coming slide.

Second is our DMF, which is paid out of resident capital on exit and retained by Ryman. The DMF is benefiting from the same front book profile with our 30% contracts now well accepted in the market. The uplift from the 30% contract base will generate significant cash flow in the years ahead. Care is similar but slightly different as it has a number of different resident funding options that are largely interchangeable. And as Cam has already spoken to, to some of the economics around demand. The combination of both the fee revenue and DMF or its care equivalent provides a recurring earnings stream and a defensive growth profile.

From a balance sheet perspective, resident capital is an important component of Ryman and the industry's efficient funding structure. This funding structure enables shareholders to benefit from the capital gain of this asset base over time. This can be cyclical in nature as we are seeing in the differing property price growth rates between New Zealand and Victoria, but represents significant leverage to shareholders over the long term. This slide provides a diagram representing a simplified version of our new capital management framework. The aim of the framework is to improve the sustainable allocation of Ryman's capital and its measurability through to shareholder returns.

You can see the main sources of funding, which provide our efficient and low cost of capital, benefiting from the nature of resident funding in the first sell-down of a new village. And with the restatement of our targeted gearing range of 20% to 30%, we are committed to a long-term resilient balance sheet for both our shareholders and our residents. The allocation of care between RV and care -- sorry, allocation of capital between RV and care can and should be measured differently -- sorry, separately, given the differing operating models of the 2 businesses. For retirement living, we have looked at a range of different reference points for what yield is achievable for this asset class. We believe well-run portfolios can deliver a yield of greater than 5%, which is what we're targeting.

Our measure of this is based on the RV segment CFEO preinterest over the RV NTA. The RV NTA should be thought of as an asset NTA, which includes resident debt but excludes corporate debt to provide the simplest form of the measure, which can be used down to a village level. But to be clear, today, across the portfolio, we are not meeting this 5% target and are under earning on our asset base. As I spoke to on the previous slide, the change to our fees and contracts reflected in our resident front book combined with the cost savings program and the progressive improvement in occupancy provide a clear path to deliver on RV yield over time.

For care, we see EBITDAF per bed as the appropriate measure, given this is the widely used benchmark across listed and unlisted operators. As we spoke to at the half year result, we were aiming for $25,000 to $30,000 in EBITDAF per bed, which is a material uplift compared with the average of $15,000 we are achieving today. Similar to RV, the combination of our cash improvement targets, combined with the progressive uplift in occupancy make this target achievable.

Within development, we are applying a more disciplined approach with a much greater focus on project hurdles as well as applying market-backed assumptions in feasibilities. Where there are projects that demonstrate an attractive opportunity, we will invest for the medium to long term. The combination of these targets generates a return, which is akin to free cash flow per share and importantly provides a full picture of cash flow across the business. The use of this return in capital management has several main choices, which, I'll speak to more in coming slides.

Our recent refinancing demonstrated the support of our banking partners and is a long-term platform from which to continue to strengthen the business and optimally position it for growth. The refinancing delivered both a lower cost of funding and an extension to tenor, meaning that we can focus on reinvesting our post-interest returns into either growth or our dividend profile.

You will note that our bond of $150 million is set to mature within this calendar year that our headroom provides the optionality to absorb the repayment of the bond or seek a new bond issuance. We look forward to coming back to the market this year as to our intentions as we consider the bond market a key component of our capital management in providing flexibility and diversification of our cost of funds.

One further element that I want to call out is the ICR covenant, which we have set at 1.5x. There was a lot of consideration behind this metric given Ryman's continuum of care and the proportionality of care in our portfolio. It was important for the covenant to have care development costs excluded for the first 24 months post first occupancy. This is due to not all residents entering under a capital product in New Zealand with many paying for their accommodation under a premium. The allowance for this is a key component highlighting the covenant's fit-for-purpose nature and matches the way we view care funding from our residents within our wider capital management framework.

This slide is a focal point for my section as it provides additional context and proportionality of how we are growing our recurring earnings. It underpins our strategy, the optimization of our portfolio and the new capital management framework.

Starting with the outcome. You can see that we are now targeting $150 million in CFEO improvement from FY '29 against the FY '25 baseline. This compares with the previously stated range of $100 million to $150 million cash improvement over 3 to 5 years. We have narrowed the measure from cash improvement to CFEO, so as to provide accountability given the nature of the contributing categories. We have also reset the measure to the top end of the range.

Talking to the categories. Firstly, occupancy improvement will drive operating leverage as development slows and we focus on filling our Villages and Care, where volume is critical. Rick and Marcia spoke to this and the size of the uplift potential, where the continuum helps to fill our Service Apartments and Care along with clear demographic demand. This category is just the occupancy uplift benefit through to FY '29.

Second, Care operating improvement -- sorry, Care operating performance will improve through a combination of higher room premiums being implemented by Ryman, along with the introduction of RAD retention in Australia and cost efficiencies.

Third, village operating margins will benefit from higher weekly fees as the front book rolls forward, combined with village level efficiency initiatives. Whilst this isn't as large a category as Care, it has the potential across the portfolio even as we benchmark within our own group. These first 3 categories are presented on a net basis with underlying cost inflation and resident growth already incorporated into the targets.

Procurement and overheads are the next 2 categories and are considered on a gross basis given their nature. They are presented consistent with our previous disclosure of annualized cost savings, although they don't include capitalized costs and unit refurbishment savings. There's already been substantial progress in both the restructuring of our head office and cost out in procurement, and we maintain the guidance of $50 million to $60 million of annualized savings for FY '26 as defined at our half year result.

Finally, front book DMF will be realized over time, reflecting the total value of the portfolio benefiting from the increase in DMF within our contract book. This category represents the difference between cash DMF recognized in FY '25 versus what will be recognized in FY '29. To be clear, these targets are across identified categories within CFEO, where we have line of sight to improve our operating performance in the near to medium term.

Collectively, they give us confidence in the $150 million target, which will underwrite a large amount of our return profile in the capital management framework. To achieve this uplift, we expect to incur $5 million to $10 million per annum in one-off costs from related investments to deliver the $150 million through to FY '29. Any such one-off costs will be made clear in the disclosure of our future results.

It is worth highlighting that reported CFEO includes other categories such as village refinancing, which is central to the economics around the retirement model. However, given this component is heavily influenced by macro factors outside of Ryman's control, we saw it as more appropriate to exclude this from the $150 million target.

Now Rick has already spoken to the opportunity to release cash from stock, which is based on what we had reported at the half year result. To make clear the measurability of the $500 million of cash release target, for CFDA, it excludes CapEx or cash receipts from new projects. And for CFEO, it is the cash release from paid out stock -- resale stock.

Another value driver for this cash release is, of course, capital from Care, specifically RADs and of course, our new resident fund product. We haven't quantified this given the level of customer choice in Care. However, this remains a key opportunity to drive CFDA and cash release going forward. There is lots to get after. And with a valuable high-quality Ryman inventory in combination with land bank divestments, there is clear potential to release $500 million by FY '29.

As we see progressive uplift in returns and cash generation and cash release from the business, gearing will deleverage in the near term. At the half year, with gearing at 28%, we are now in the initial band shown in this slide. The land bank divestments, along with better performance into FY '27 will progressively move us to the lower end of this range.

In the medium to long term, depending on the speed of the $500 million of cash released, Ryman will be in a position of having a lower level of gearing. However, the intention is to remain within a band of 20% to 30% in the medium to long term. Being within this range provides the capacity and prudence for Ryman to continually assess the optionality around growth opportunities that Naomi has spoken to.

For shareholders other than dividends, a core proposition of the returns in Ryman is sharing in the capital gains from this asset class over time. Whilst the NTA of Ryman often gets focused on with the $4 billion shown on this slide, there is over $12 billion of total gross assets across the group. I should also call out that Care within our NTA is only the land and buildings and arguably not its full value.

Whilst this is due to the accounting treatment for Care, it is something for investors to note given Ryman's proportionality of Care across the portfolio. Whilst there is cyclicality to real estate prices, which we manage through price governance, there is meaningful value to shareholders of consistent capital gain over the long term at a very efficient cost of funding.

Starting at the bottom of this slide, today, we are announcing our new dividend policy with a payout of 20% to 50% of CFEO, which we expect to recommence from FY '28. Given the cash flow improvement across the business, we are using CFEO as the basis for dividend distribution, given it represents sustainable cash returns. I should also add that using CFEO is aligned with the feedback that we have received from shareholders. The payout range of 20% to 50% is intentionally conservative to create capacity to invest in growth over the long term. It also holds management accountable for the generation of a cash-backed return.

Lastly, we expect to recommence the dividend from FY '28 when the profile of our earnings and related cash generation should be stronger than today. This slide shows the cascade of capital allocation in relation to the dividend policy and brings into context the approach to the payout range of 20% to 50%. The initial use of our CFEO generation above debt servicing is to distribute a minimum of 20% to shareholders, after which there are several options.

As Naomi has spoken to, there is optionality within and around the portfolio as well as on both sides of the Tasman. The choices around growth and distributions will have regard to the right level of gearing depending on Ryman's portfolio, our market and the opportunities ahead of us. Importantly, we will not pay dividends from debt in future allocations.

The position Ryman is now in post refinancing allows us to take the next step in more disciplined capital management to provide stronger returns to shareholders. We will do this by focusing on a targeted yield from RV and operating profitability from Care, benchmarked against the best performers in the industry. And by delivering on the operating cash improvement, it will underwrite the uplift in these measures as well as the return profile. This will enable Ryman to reduce gearing in the near term, pursue growth opportunities in a disciplined way and pay dividends.

I'll now hand back to Naomi.

Thanks, Matt. We now have time for around 20 or 30 minutes of Q&A before I wrap up. So a longer session on any of the presentations that we've done today. So we'll open up the floor to questions. Nick?

Just on the $150 million could you just talk through, which of those buckets have, I guess, in your mind, changed materially, since you last talked to the market because a lot of things like filling up your villages, some of the changes in DMF, the cost saving targets are unchanged. So what's given you that increased confidence in that $150 million? And has there been any new revenue or cost opportunities that have gone into that versus, say, 6 or 12 months ago, when you first announced it?

Thanks, Nick. So I think a couple of things have changed. First of all, when we announced it a year ago, it was $100 million to $150 million. Just from a personal perspective, I was 3 months into the role at that point. I'm now 14 months or so into the role. And we have, from what you can see on the slide, quite clear views on exactly, where we are going to go and target the top end of that range. And the purpose of giving you those buckets is to sort of communicate really that confidence and the identification of the specific savings.

I don't think the -- what we are going after has materially changed, but our understanding of the value in it has shifted as we got further into it. And probably the one thing that would stand out to me, and I'll check if Matt's got anything to add is the Care business has an ability to reset performance much more quickly.

So as you shift pricing and improve occupancy and things like that, that's coming through much more quickly in cash in Care compared to the Retirement Living business with its tenure, with its contract turnover that just takes a little bit more time to see the full value. So while we've given you the FY '29 numbers, that is not the full benefit of the steps we're taking. That's just what we see as being targeted within that initial time frame.

Matt, anything else that's changed from your perspective?

No, Naomi, all I'd add is that the work is always underway. I think the quantification of these savings requires time as it should. And I think the team has done a great job running to ground a number of the opportunities that we knew were present versus a factor of quantification and then target setting to the extended time line.

I know Will had a question before the break. Do you want to go to Will first and then Shane and then Jeremy.

Will Twiss from Forsyth Barr. You've kind of given us a time frame around the aged-care goal in terms of getting the 25,000 to 30,000 EBITDAF per bed by FY '29. How should we be thinking about the timing in terms of the goal around retirement living in terms of that 5% yield on NTA?

Thanks, Will. You're right, we haven't been specific on that. What we have been specific on is obviously the improvement we see coming through CFEO within that FY '29 time horizon. But I might pass to Matt in terms of talking to what's the range of things that can contribute to us building back up to that more than 5% level longer term.

Yes. Thanks, Naomi. Thanks, Will. In terms of the target, it's a long-term target. Let me start by saying that. I think it's important in terms of the calculation components that we have provided you to understand that in terms of the $150 million, that's the recurring sustainable improvements per the categories identified.

It doesn't include resale margin, which is, of course, in the RV yield component in the numerator. So there are long-term components, which are variable by nature in terms of that resale margin, which we didn't think was appropriate to include in the FY '29 time horizon, but on a long-term yield basis for RV is appropriate to include.

The other thing I'd add to Matt's comments is just where we're at in our reset, if you think about the levers we've pulled, they're really portfolio-wide levers. And so that's what a lot of the targets for that FY '29 time frame are focused around.

As we step into the next stage of the strategy, portfolio optimization comes more to the fore. Richard joining us with a deep background in asset management for value, we'd see more value coming through that. And that all helps us get that portfolio-wide yield up to the sort of level that good performing RV assets are at.

I think Shane was next.

Yes. Shane Solly from Harbour here again. Just you talked about earlier on, this is a scale industry. And I'm just interested in what scale means for Ryman and maybe you could give some illustrations as to where scale -- where you want to be?

Sure. So if I talk about, first of all, Shane, the value of scale, and I think about it in a couple of parts primarily. In aged-care, first of all, it's a high-cost business, a high fixed cost business. It really relies on high occupancy, efficient leveraging of systems and expertise. It's very hard to do that in small facilities. It's very hard to do that in small corporate groups.

So we think of optimal capacity or size in aged-care of probably in the order of 80 to 100 beds per site and then the added benefit you get from running a portfolio of assets of scale that adds to that. It's very difficult in Australia now, we see this post the reforms for small operators to compete with the regulatory requirements and just the nature of the business.

So we think scale has got a big advantage in aged-care. We think that's going to grow. We also think as services become a bigger part across the village, the same applies into RV. If you think about the value proposition we can offer to residents as we have this next generation of residents coming through the boomers, who are looking for more, wanting for more, but also able to pay for more, being able to offer more services, more options, more choice across the village. That's all a real opportunity. And to set up the systems and processes to deliver that, scale really helps you.

Similarly, in terms of a lot of the digital opportunities that we have, whether it's managing a $12 billion asset portfolio with an $80 million per annum capital spend through to the size of our workforce, almost 8,000 people. There is huge leverage in these capital and people-intensive businesses that AI-enabled systems and process can really unlock. Scale allows you to do it. It's very hard to just invest in the capability without that. So that's in a way still ahead of us because we're really resetting what we've got today. But I certainly see it as an important part of the future opportunity.

I think the other part of your question is how big do you want to be? And what does Ryman look like long term? We don't have a fixed view on size as an overall objective. We want to be in the markets that value the Ryman proposition that have the enduring demand that we can be confident that we're going to deliver a strong return to shareholders. You don't want to be in an oversupply position with assets like this. The scarcity factor adds to the value and helps you in a business that really relies on occupancy.

And so we're comfortable with where we are in New Zealand. We see great opportunity in Australia. We've had great success in the first 12 years. We've been entered the Victorian market. We've now got the scale. We've got the ability to work within the regulatory regime there, and that's a great platform from which to grow in the future.

I think Jeremy is next and then Bianca.

Jeremy from Milford. Just a quick one on the CFEO. You've got the $150 million improvement. To what extent did you consider an absolute target to put out there? And just sort of noting in 2025, you did negative $115 million CFEO, and I know you've excluded resales, but to what extent did you think about putting an absolute target or number out there?

Thanks, Jeremy. I'll pass to Matt to talk to that.

Thanks. Look, ideally, we would put a target out there that's absolute, but it's made up of components that to the extent of the $150 million recurring sustaining improvements that we are targeting and by the nature of the categories are well within our control. To the extent that the broader complete CFEO picture includes other elements like resale margin that over the long term will normalize, but within that FY '29 window being a shorter horizon are more due to factors outside of our control.

So whilst price and our price activity is, of course, a component, there is the real estate market and property prices, which is probably equal to, if not a greater component. So given there are different levels of composition of what's within our control within those other elements of CFEO like resale margin, we felt the target was more appropriate for things that we could focus on and execute on within that time period of FY '29.

Just to add to that and to your question, Jeremy, if you think about the 2 targets together. So in the -- as Matt said, that sustainable recurring CFEO improvement that we just want to see growing over time in the business. We want to see growing CFEO over time on a consistent portfolio base. And separate, we do see opportunity with the stock we have in terms of reducing that stock level. That's captured in the $500 million target. So that $500 million target does have a component of CFEO. It's got CFDA as a starting point and then added to that, the reduction that we are expecting to see in the bought back stock.

So we're trying to keep those separate intentionally, one sustaining, recurring, keep doing that, grow over time. And the other is more of a one-off working capital release. And so we are actually trying to give you through the 2 targets by FY '29, a full view of that.

We'll go to Bianca next, and then we'll come back.

Bianca Murphy from UBS. Just a question on the 6 retained greenfield opportunities. So the majority of those are high density. Could you just give us some color around how you're planning to stage those projects and make sure the balance sheet doesn't get too stretched again?

Thanks, Bianca. And good question. Good question for Richard, but probably need to give him more than 2 days that he's had so far. There's no doubt that with vertical villages, staging is more complex, but there are still things we can do.

You actually saw a really great example of that at William Sanders this morning, where that village was built over about 4 years in a staged way, where we could bring independent residents into the first stages with the cash flow that comes with that and then completing the continuum of Care with the main buildings, but it is more tricky.

The other thing that we're conscious of with the greenfield developments and it's part of why we want to have more of a diversified approach to development is that the greenfield sites tend to be quite capital intensive. We certainly don't want to get back to the situation we were in of having 16 projects, $4 billion of spend on the go at one time, that is too much and clearly stress the balance sheet.

But having a number that is manageable, staging them so that, again, we've had 6 Care Centers open, main buildings open in the last 2 years. We wouldn't do that again. That's a lot of Care and Service Department capacity to bring on at one time. It's a lot of main buildings to open with the cost and start-up and commissioning that comes with that.

But phasing is also between projects across projects within projects. And so part of what we'll be looking for is that clear view and ranking of the best opportunities we have, but also how do we phase them to really manage the balance sheet well. And as Matt has spoken to, we've got that ability within the new dividend policy and with the gearing policy that we've maintained to have some flex up and down to allocate more CFEO to fund our growth projects or to have that higher level of gearing.

But certainly, I would expect in the next couple of years, we're going to have a good amount of capacity for growth in the balance sheet and be well set up for those best opportunities that we want to progress.

Francois from ANZ. My question is as follows. You're working really hard to grow the recurring revenue from the business. And then you're planning in '28 and thereafter to keep half or more than half for growth initiatives and opportunities. Can you give us an idea of what returns you will be seeking for those growth opportunities?

Thanks, Francois. I'll pass to Matt to talk to that one.

Thanks, Francois. So the measure we use is the project IRR for returns on new projects. And that has regard to both the time and cost to build, the time and cost to sell down the project as well as the carry costs over that period of time. It also allows us to compare projects, which is, of course, important. We haven't given you the specific hurdle today. As we look forward as to new projects, we will look in terms of those new projects to provide a level of measure of return that we're pursuing.

So as and when we are bringing new projects forward with a specific view around capital commitment, we would, as Matt said, look to also give you an expected return and I'd be clear on that upfront before we're next deploying new capital.

Today, you've decided on the dividend policy. So you must have an idea of what kind of -- for fitting a chunk of the dividends to investor, you must have an idea of what kind of returns you will be seeking.

So I think if you look at what's in the capital management framework, we clearly talk about positive NPV. So at a minimum, we're investing in a way that's above our cost of capital. But we're also, as Matt talked about, wanting more discipline around project IRR. And the reason for that is because we think that often the time taken to build and sell down has been missed in some of the economics previously.

And so you'll form a view on cost of capital. There's lots of views out there as to what it might be. But it's contributing to the enterprise value, but it's also as a project confident to sell down within a time frame that the project is -- has a strong return and then ranking them across the full range because there are quite a range of different propositions based on size and time to build.

And so we want to look at that across greenfield, across brownfield, across the mix in the portfolio and think on that basis, that portfolio of growth opportunities we have. Where you're probably going and getting to is where does this all end up in terms of a return on capital employed or other metric. And that's certainly something we're going to keep looking at and thinking about. I wouldn't want you to think that this capital management framework is done and never to be touched again.

This is a big step for us to be very clear in how we are running the business today and to have clear metrics around that. We're going to make sure we listen to the feedback from the market. There is always good perspective on that. There's a range of views in this particular sector, and we'll look to continue to refine it as we move forward through the strategy we've put forward.

Arie Dekker, Jarden. Just 3 questions. Firstly, just thinking about our ability to, I guess, measure how you're tracking against us. Would it be fair to say that in terms of those buckets in CFEO that contribute to that $150 million that they're pretty equivalent to you sort of guiding to your expectations that you can improve operating EBITDAF by $150 million over that period?

I'll pass that one to Matt.

Yes. So Arie, the majority of the buckets are CFEO related. And to the extent that the target is CFEO, you will also get an EBITDAF uplift corresponding to that, although not all buckets are EBITDAF equivalent. So DMF and the sixth bucket, an example of that. But yes, to the extent that the 6 buckets collectively represent an improvement in sustaining CFEO, yes.

And on conscious of your earlier question, Arie, which might have been answered, we're obviously very focused around EBITDAF as a key measure in Care and understanding that at a village level and across the portfolio. In RV, we probably see CFEO and the cash yield as the more relevant all-in metric just because of the accounting treatment of DMF, as Matt's spoken to.

Yes. And then just on the gearing and the sizing of debt to that point that you made about your inability to control macro factors and I guess, in the valuation that underpins LVR, there are additional factors outside of your control, the independence of it.

Yes. So I'm just sort of interested in why you're using that measure to target the sizing of your debt given some of your concerns about control and that and particularly the issues the company has had in the past in using LVR as a guide to debt sizing.

Matt, do you want to talk about that?

Yes, sure. So I think the 20% to 30% is appropriate given there's already a degree of leverage in the business from resident funding, which can't be ignored. So that needs to be in the consideration to the 20% to 30%. We have given you the other measures in terms of the headroom to our facility, 1.5x covenant, obviously, consideration towards debt for development activities.

So I think there's a composite of measures. It also connects through our capital management framework to our dividend payout policy. So 20% to 50% at the low end, 20%, it allows us 80% of CFEO return to be redeployed back into debt servicing or reduced gearing.

Yes. And then just a couple of guides on the development front. So in terms of, if we go back to the Ansell presentation and what was sort of outlined there right at the end, I think, in terms of the expectations for demand for independent living in particular versus, say, assisted living, should we expect to start to see that influence both, I guess, the mix of the developments you start to undertake more skewed to assisted living than perhaps in the past?

And then also on development, just a question around land acquisition and sort of the time frames that we might expect to see you add to those 6 greenfield sites?

So on the question of mix, Arie, that's something that is absolutely under review. I think one of the things we're going to see change is the shift from thinking about the physical footprint as a fixed proposition in terms of the Care you provide within that physical footprint. And so that sort of separation of independent of serviced or assisted Living and Residential Care, almost by their terms, they're communicating how fixed we are in the service we're providing.

I think what we're going to be doing is looking at how do we build more flexibility into the physical footprint because we know that the customer expectations are going to change, the government funding is going to change, but we're building 50-plus year assets. And so we need to make sure we're doing that in a way, where we can flex the use of those assets over that life of asset aligned with how the market is going to shift.

We think we've got a really good starting point because already today, 20% of the portfolio is serviced apartments, 30% of the portfolio is aged-care, and we've got a lot of independent living that is apartments, which is easier to provide assisted living into generally. There's a lot that already in the physical footprint that exists today will easily flex to a greater level of service. We do, in saying that, and this is something we're quite mindful of, need to make sure we're attracting residents, who are really going to value that proposition.

And so helping that shift occur over time in terms of the offering, how we allow for residents to opt in and out of things is a key part of what we're thinking about over time because clearly, there's a risk in pure-play independent living around tenure, if we don't get that right. And we think our model is a key part of how you manage that risk.

Jesse, I think...

I've got 2 questions. The first one is just a follow-up on the development economics. So project IRR is a bit of a challenge for Ryman because the projects are meant to be 100-plus percent geared over time with resident financing. So the IRRs can tend to look very high initially. But if there's some kind of variation, cost overrun, things don't sell down as quickly as you want, then they can very quickly go negative or become very small.

So I just wonder, are there any other secondary -- how do you think about, first of all, the amount of leverage in the projects, when you look at your cost of capital that you use as a hurdle rate? And then also, are there any other secondary metrics that you would use to look at projects as a bit of a fail safe because IRR can be so volatile?

Great question. So in terms of the gearing, the gearing or the level of debt is in regard to the total business. So we don't think about gearing in terms of the individual project. We think about the project as to its effect on gearing for the whole business. And you're right, there are risks and variables involved in a project IRR given that time period and the speed to sell down on any new project. That's why I think it's important going forward, where we look to deploy new capital to Francois's question, that we provide those return targets that we're seeking from new projects going forward to make that clear.

One other thing I'd just add, Jesse, is just the difference that exists between New Zealand and Australia and in how Care capacity is funded. So in Australia, we have 60% RAD penetration. That provides significant capital to fund the building of Care capacity.

In New Zealand, we have about 10% RAD penetration. And so Care does not recycle capital. And the reason we think project IRRs are so important is that often, if you just focus on cash recycling, you're not seeing the time value of the money, the holding cost of the land, the holding cost of the stock, the time to build and ultimately measuring on that basis.

And we do need to think about Care separately because it's got different economics. As Cam said, tricky to get to stack up our stand-alone today just with where the funding is at. But we'll keep looking at that on a case-by-case basis to make sure each project has a strong return off a much a clear basis rather than relying on effectively the capital gain through the duration of the project, which was often driving that in the past.

Okay. Then the next question is, if you -- have you looked at -- if you meet the targets that you've set by segment for Ryman, so the 5% cash yield on retirement and the EBITDAF targets on aged-care and then layer in the other elements with the development using the cash retention you're planning within new dividend policy, interest expense, corporate costs and so on.

Can you say what that looks like on a consolidated basis for Ryman? So presumably, if you meet those targets, you'd be able to model out and say that means overall, after all the additional costs, et cetera, Ryman overall should have an X percent cash yield on net tangible assets, and it should have a Y percent return on equity. It should have a growth rate that looks like something. Can you give us a bit of a picture of the overall consolidated targets for the company that you're going for?

So in terms of FY '29, I think the thing to highlight is these are not our long-term targets. That improvement we're targeting is what we're looking to get to by then versus what we might look to get to from the portfolio long term. And what we've done with the capital management framework today is to say across the different components, retirement living, aged-care, development activity, what are we targeting in terms of financial performance.

That question of aggregate portfolio performance is definitely something we want to come back to as we get through this performance improvement journey. And clearly, the answer is much better than today, but we just don't have a specific view for you on that right now.

So we'll look at how we can continue as we go forward. We'll be reporting against looking at how we can report against the targets we're setting, so you've got that clear line of sight and then get to that clearer view on how we effectively grow overall returns over time.

Probably got time for one more final question. Stephen?

And thanks for the detail on the land bank review that's been really helpful. Just had some questions on some of the decisions in terms of what was kept in the land bank and then maybe what's up for sale. So first of all, on the Takapuna site, it's a obviously well-located site, but it's very small. If you build it, it will be quite a small village, maybe a boutique, we might call it a boutique village. So maybe you could just help us with the thinking around why you're still keeping in the land bank at this point, planning to progress it? And will the economics stack up for these return hurdles that you've talked to?

Thanks, Stephen. So yes, as you say, Takapuna is a smaller site compared to what we generally will look for. It is in the right target demographic. As you would have seen visiting Williams Sanders in Devonport today, that is our market. And so what we'll be doing is through this prioritization process, look at how that stacks up compared to the other greenfield opportunities we have, and we'll be progressing the best of them.

So for the reasons you've said, it's got some constraints in terms of what you can do on that site, but it's got the market. And that's what has led to the decision to make -- to keep that in the portfolio today. We'll look at how we prioritize the best opportunities across the land bank that we are retaining.

Can I just ask one quick one? So maybe one for Matt on the gearing target. So you've got the gearing ratio coming down in the next few years and then potentially with the upper level going to back to 30%. Within those targets, there will be -- I'm sure you've modeled in the background, some kind of build rate or there would be a range of build rate outcomes from very little to potentially something more than that.

Can you give us any kind of indication within that range? Because it's a big range, 20% to 30% gearing, especially in the longer term, right, what might be at the top end of that range and perhaps the low end in terms of the level of construction activity that you might be targeting longer term?

Thanks, Stephen. The 20% to 30% is a big range, and you can see that we're taking steps to deleverage in the near to medium term. I think we've given you several building blocks to help you model that. I'll leave it up to you to come up with a cost to build per unit or per bed as to an extrapolation depending on the sensitivity you want to apply between 20% and 30%. We think 20% to 30% is a prudent gearing range. It gives us resilience to the balance sheet versus above 30% against the point I made earlier that there's resident debt within our capital stack as well.

But I think the range you can apply an assumption based on a cost to build that will give you a number depending on where you want to forecast within the 20% to 30% and it will be subject to the opportunities ahead of us to the extent to what Naomi had said earlier, where we have projects that meet a return hurdle and exceed it and are attractive for us versus alternatives, we will pursue them and stay within that 20% to 30%.

I'll leave it up to you to work the sensitivities.

And I think one of the key things Stephen, is just that shift to flexibly developing. So not having the imperative to develop because we're carrying a big cost and a big program. We want to be able to develop, when it makes sense, but equally not develop when it doesn't make sense. Ultimately, if the better use of shareholder funds is to return it, we will return it. If we think we've got really good prospects for investing it, we will invest it. And we think we've got good capacity in the balance sheet with the capital management framework we've presented today to do that, as Matt's outlined. Right.

Let's do a quick wrap up before I hand over to Dean to close. Today, we have run through our refreshed strategy. You have, first of all, seen what's not changing, which is our focus on being industry-leading in meeting the needs of our residents and continuing to evolve our offering as their needs and expectations change.

In wrapping up, I want to give you an overview of where our focus will be in the next financial year as we execute on our refreshed strategy. As we look to continue to be the provider of choice, we will maintain our resolute focus on the quality of care that our residents receive, which comes from the culture and engagement of our team.

We will be looking at opportunities to improve customers' experience, including providing more flexibility in payment choices. And we will be working alongside the New Zealand government as they look to find solutions to ease hospital bed pressures and deliver sustainable aged-are funding.

In FY '27, we see opportunity to grow recurring earnings by increasing the occupancy levels at our developing villages, optimizing utilization of our Care capacity to drive better outcomes for our residents and improved financial performance, broadening the market for our service apartments and continuing our efforts to drive efficiency and cost out of the business.

We will be increasing our focus on optimizing our portfolio by growing resales to exceed turnover and reduce stock, more targeted allocation of capital for value across the current portfolio and continuing the divestment of land that doesn't meet our portfolio growth criteria to release $200 million in cash.

And on our last pillar of value-creating growth, our focus areas for FY '27 will be to sell down the new sales stock we have, progress the next stages of Patrick Hogan and Northwood, establish our outsourced delivery model, which will give us the flexibility to grow in where we grow and in how we grow. And Richard's team will prioritize the best opportunities for brownfield and greenfield growth across the portfolio.

Now I know we have gone through a lot today, and I hope we have provided you with the confidence that we have a clear plan for this business and to deliver value. I'll finish up by reiterating the key takeaways from today, which I shared with you upfront.

Ryman is focused on growing high-quality recurring earnings, optimizing our large property portfolio for value and returning to portfolio growth that creates value for shareholders. We are uniquely positioned with the portfolio of assets and capabilities we have today to meet the significant growth in demand that is coming and are positioning the business to have the flexibility to benefit from this.

We have set clear targets for improving financial performance in the next 3 years and have reiterated those targets and our confidence in them again today, $150 million in sustainable cash flow improvement and $500 million of cash release, and we will continue to update you as we move forward on how we are performing against those targets.

We have significant optionality for portfolio growth and a plan to return to disciplined growth in the coming years, progressing those opportunities with the best returns. And with a clear capital management framework now in place, a new dividend policy and improving financial performance, we expect to return to dividends in FY '28 and have a solid foundation on which to grow shareholder returns.

With that, I'll hand over to Dean Hamilton, our Chair.

Thanks, Naomi. I was just reflecting sitting there, actually, it's good to be at the end of the meeting, not at the start of the meeting, which is what I was 18 months ago before we're fortunate enough to hire Naomi. So nice to reflect on what has progress we've made in a relatively short period of time.

The clicker, Naomi, where is the clicker? I thought I'd just touch on 2 things. One, the Board. We've made a significant amount of change in this Board over the last 2 and a bit years. James and I started in 2023 and then progressively built up the Board since then.

In terms of that Board, we've got -- I'm really pleased with how it's come together in terms of the mix of capabilities and experience we've managed to attract to the company over a period that was actually a relatively challenging external environment. Kate has a background in construction and law and then moved into health care, where she ran all of Ramsay's 80 hospitals, which is a highly competitive game and then became CEO of IVF business, Virtus before it was taken private in Australia. So Kate brings a great set of experiences.

James will be well known to you. His experience in audit and risk and investor in capital markets is probably second to few in New Zealand. So great to have James leading the audit team there. Paula is our long-serving director at 6 and a bit years. Paula has had a career in people and performance across health care and finance.

David was a partner at BCG for many years, leading their strategy and M&A practice. He then moved to Stockland, where he led their business development and then ran the whole retirement living business before divesting it. And Scott will be well known to you as well, having led Precinct for a number of years now, really focused on premium property development across Auckland and Wellington. So bringing great depth so great for Scott to recently join the Board.

So we've trimmed that Board down a bit. We think we've got one more to add back. As we look at what our business strategy is how we're focusing in on operating ways of working, how we bring digital into the customer journey into -- also into our back office. We'll look to bring one director on with that direct experience to constructively support management in those endeavors. So I'm pleased with how the Board has gone.

Clearly, a lot has been achieved in the last couple of years from a reset perspective. And really, the key message I want to deliver today is the Board is very conscious that we may need to move away from that tactical reset and to sit back and focus on strategy and looking at long-term shareholder wealth creation.

But in terms of the tactical stuff, pretty much a brand-new Board, a large change to management, which we're really supportive of. We're delighted with how Naomi has got our hands around a relatively complex business pretty quickly. We talked about the timing in the Investor Day, and we felt that it was time to get back in front of people.

And I think one of Naomi's key messages is it's a dynamic strategy, but some clearly some key strengths that we wanted to focus on here today. So we've reset Board, we've reset management. We've reset the accounting. We've reset our financial transparency, the way in which we report what we report on.

We've reset the management incentives. So a significant amount of foundational change, but clearly pivoting now to much more strategic dialogue with management, which is great. In terms of the focus we talked about today, maintaining that industry-leading customer satisfaction, there is no Ryman without a resident. So that's critical to us and one of the Board's key responsibilities in my mind is organizational reputation. That generates sustainable returns on existing capital deployed.

The Board is right behind that as a key priority. We actually think that's an enabler for future development as well because the fit of your current portfolio is you put that in your forward cash flow model, IRRs, NPVs all look better. So we don't think that's actually inconsistent. We actually think it creates more optionality going forward, having a highly cash positive core business. Disciplined approach to future expansion in markets with enduring demand.

The Board is supportive of getting back out and at it, but the business needs to rebuild that capability. Richard has only just joined. So we need to let him get his feet under the table, we need to build that capability back. But I'm very confident that this business with Board and management support will get back out building. Prudent capital management. When I joined, debt was heading towards $3.5 billion. And when we were in diligence and they raised -- the initial equity raising was before James and I joined, that brought it down.

And then we obviously had very challenging business markets, which meant that the business was under a fair bit of pressure. So we had to raise equity again, which hadn't been anticipated. So we certainly appreciate everybody's support. But we're not going back there again.

Funding that at 2%, I think, hit a lot of ills. You can't survive when interest rates effectively went to 6%. So they traveled on the business at $3 billion worth of debt. That math was just in a business that wasn't creating positive cash. You didn't have to be a genius to see that was a place that you could not survive.

So everyone has done the hard work. Investors have kindly supported Board and management in that. We need to be prudent. We don't want to do that again. We think we've got the capability to both generate cash return and grow within that capital structure. And lastly, a real focus on total shareholder returns, which is a mixture of dividends and capital gains. And we've aligned management incentives.

When I first joined short-term incentive, medium-term incentive, long-term incentive, all driven on underlying profit. So we've had to dismantle that and the long-term incentive now is all around TSR. So a mandatory requirement to retain those by management, when -- as and when they vest and a mandatory requirement for Board to own shares. So hopefully, we've got some good alignment and skin in the game across Board and management.

So that was the key things I want to touch on, strong endorsement by Board of this strategy. But thank you for your time. Really appreciate the support of Ryman. We appreciate the support of the Board and the management, and we look forward to returning that with much improved returns. Thanks for today.

Thank you for standing by, and welcome to the Ryman Healthcare Half Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Ms. Naomi James, Chief Executive Officer. Please go ahead.

Good morning, everyone. I'm Naomi James, Chief Executive Officer of Ryman Healthcare. Thank you for joining us for our half year results for the 6 months to 30 September 2025. With me today is Matt Prior, who commenced as Chief Financial Officer on the 31st of July; and Hayden Strickett, our Head of Investor Relations. We're going to be working to get through the presentation in around 30 minutes to allow time for Q&A before we wrap up at midday. Looking at the agenda, I'll provide an overview of sales, stock, operations and development before handing to Matt, who will speak to the financials and capital management. And I'll then provide an update on outlook and strategic priorities before opening up for Q&A.

Starting on Slide 4. As you'll see from today's results, we are well on our way to delivering better returns and are doing the things we said we would do when we raised capital at the start of the year. This is the first positive free cash flow result that Ryman has announced in more than a decade. We have made substantial progress towards achieving our cost reduction target in the first half and increased our target for the full year. Our refreshed sales strategy is rebuilding momentum with 2 quarters of sequential growth at our new 30% deferred management fee. Our balance sheet reset is now complete with the full bank refinancing we announced at the start of the week. And we have today announced that we will hold an Investor Day in February, which will cover our strategy refresh and new capital management framework.

Let me start with the first half highlights on Slide 5. And starting with our sales performance. We've seen a rebuild in sales volume for the first half with total sales of 704. While down on the second half of last year, which was a record, this was up on the fourth quarter of last year and is at a significantly higher value with the new level of DMF. On the operating side, we've stepped up the level of cost out. To 30 September, this is now at $40 million annualized, and we've uplifted the full year target to $50 million to $60 million. This is reflected in our financial performance with a significant improvement in operating EBITDAF and positive free cash flow for the half of $56.2 million on total revenue up 13% on both pricing and occupancy growth, while total costs fell 2%.

We've completed the refinancing of all banking facilities, significantly extending the average facility tenor to 5 years. As part of this refinancing, we also improved our pricing and have more resilient financial covenants. Through the half, we completed an ASX foreign exempt listing, which we committed to do at the time of the capital raise. This is a pivotal step in broadening Ryman's investor base while reinforcing our commitment to the Australian market. Finally, we've made good progress with the strategy and portfolio review with additional land divestments bringing total contracted sales to $110 million. We will be coming back to the market at an Investor Day in February with an update on our refresh strategy and capital management framework going forward, including our dividend policy.

Now jumping into the detail, starting with sales on Slide 8. We've seen continued improvement in sales effectiveness and contract conversion driven by strong lead generation from village open days and targeted sales and marketing initiatives. Looking at the first quarter, we saw a 12% step-up and another 9% step-up in the second quarter in our occupied sales. As a reminder, these are RV unit sales only, and we do not include care RADs in our sales numbers. This year, we introduced quarterly reporting. So you already have the sales figures you see on this slide. The new news is the update to our full year guidance to 1,300 to 1,400 units, which I'll speak to at the end in the outlook section.

Moving now into pricing and the breakdown in sales mix. On Slide 9, you can see the changes we made to the pricing model are now fully in place. As a reminder for those new to the Ryman story, our sales, which are recognized at the point of occupancy typically lag contracting by 6 months on average. We made the shift to a standard 30% DMF on the 1st of October 2024. So contracts signed prior to that date have now been settled and the first half of this year reflects the pricing changes. You can see that 3/4 of new residents are moving in on our standard 30% DMF with the remaining quarter being a mix of DMF options, demonstrating the flexibility in our pricing framework across DMF and unit pricing to meet individual needs. Our contracts are long dated and the benefit of these changes will build over time with annual portfolio turnover currently at 12%. As well as the uplift in DMF, we're also seeing a significant step-up in weekly fees with an average 60% uplift in the level of weekly fees on rollover of units.

Moving now to sales contracts on Slide 10. You can see again the significant improvement half-on-half coming through in our forward contract book with both increased contracting levels and a reduction in cancellations. Market conditions are still mixed across the regions. We are seeing early signs of recovery in Victoria, while Auckland is yet to show meaningful improvement, which is significant for Ryman with around 30% of the portfolio in Auckland. Our contracted level of stock is lower, reflecting the recent completion and settlement of presold units at Kevin Hickman and Nellie Melba.

Stepping now into the breakdown between resales and new sales on Slide 11. Our average resales pricing has been broadly stable on first half 2025, while slightly down half-on-half due to mix impact. Independent units are down 2% year-on-year, while serviced units are up 1%. We've seen our gross resales margin, which reflects the cumulative capital gains on each unit continue to moderate from historical highs. This reflects the flat housing market we've experienced in recent years. We've seen resales volumes increase across both independent and service departments compared to the prior half. But you will see there is still a gap between sales and turnover, 81 units for the half, which means as we signaled at our full year results, there is a working capital drag through the half with an increase in resale stock and the payout balance.

Turnover is an important driver of cash generation in our model through both DMF and capital gains. With improving resales, we have a significant opportunity both to increase cash generation and to release cash from the $330 million of bought back resale stock we have today. Turning to new sales on Slide 12. New sales have reduced, reflecting the planned ramp down in development in response to elevated industry stock in some locations. As a result, our level of new sales stock has remained broadly flat over the past 6 months. We do have elevated levels of serviced apartments following the opening of 5 main buildings over the last 18 months. This is a key area of focus for us, and we are considering a number of options to improve utilization of this product.

Average pricing remains strong, supported by a favorable mix with 45% of new sales coming from Australia. And importantly, our total new sales stock value of around $470 million at the end of the half represents a significant cash release opportunity going forward. As we open the operations section on Slide 14, I'm pleased to share that Ryman has once again received significant external recognition. I know these award slides sound a bit repetitive given how many we've won over the years. But this is ongoing recognition across both the aged care and retirement living parts of our business, which truly reinforces the strength of Ryman's reputation.

Importantly, our internal customer survey results have also continued to improve year-on-year across all parts of the village. It's been especially pleasing to see this progress in a year where we've undertaken a significant reset across many parts of the business. And I want to acknowledge the dedication and commitment of our Ryman team members who work every day to deliver great service for our residents and are working to make our business performance even more sustainable.

Moving now to aged care performance on Slide 15. Starting with pricing, we have seen significant period-on-period improvement in both room premiums in New Zealand, up 10% on PCP and an average refundable accommodation deposits, or RAD balances in Australia, up 5%. These gains are in addition to the base care funding uplifts implemented in both New Zealand and Australia. In New Zealand, a base care funding uplift of 4% took effect from 1 July.

We have also successfully trialed a new product for residents transferring to care from within the village, which we're now rolling out across all of our New Zealand villages. This allows us to grow the level of resident capital in care in New Zealand and gives our residents more choice in how they fund the cost of their care. In August, we communicated the closure of our 2 oldest rest home level care centers in Christchurch. Time to align with the opening of the 80-bed new Kevin Hickman facility, every resident has been supported to find a new home that meets their needs.

Moving on to Slide 16 and the significant progress with aged care reforms across both Australia and New Zealand. In Australia, reforms have been enacted and are now moving into the implementation phase. Changes to allow a 2% annual retention of new RADs came into effect on 1 November. With our average incoming new RAD in Australia currently exceeding $800,000, this is expected to deliver a meaningful increase in revenue from new RADs moving forward. Ryman is already well progressed in meeting the new clinical care minute requirements, which become mandatory with the new funding changes.

We've also seen significant progress made in New Zealand with the government announcing the establishment of a ministerial advisory group. While it is lagging Australia in undertaking the necessary reforms, we expect New Zealand will benefit from being able to draw on lessons from the Australian reforms, taking the elements that have worked well and delivered meaningful benefits while supporting the delivery of high-quality care without creating undue compliance burden. And the New Zealand government has been specific on the timing it wants to achieve, advised by the middle of next year to enable it to enact changes to the funding model in 2027. This will provide time for all political parties to commit to funding reform ahead of the New Zealand election next year. And there's a big focus on the reforms gaining bipartisan support has occurred in Australia.

Moving now on to development. I'm pleased to announce today the appointment of Richard Stephenson as Chief Development and Property Officer. Richard brings deep sector experience with more than 20 years working across the retirement living and aged care sectors in New Zealand and Australia. The addition of Richard to our senior executive team positions Ryman for a return to disciplined growth and supports the continued delivery of high-quality communities for residents.

Moving now to Slide 18, which sets out the status of our program of works across our in-flight projects. We've made good progress in the last half with the completion of the final stage at Nellie Melba completing the village, the completion and opening of the Kevin Hickman main buildings, the commencement of the main building at Patrick Hogan and progress of Keith Park Stages 8 and 9 with these independent apartments forming the bulk of our second half build guidance. We expect updated plans for our Hubert Opperman village to be finalized and approved next calendar year, allowing for the commencement of construction, which will be the first project we deliver under the outsourced model. And we continue to have more than 300 RV units sitting in our land bank for future stages on these projects, which have planning approvals and are ready for development as and when market conditions support it.

Jumping forward to our land bank on Slide 20. In February, we announced that we were undertaking a comprehensive review of our land bank, which was independently valued at $376 million at 30 September. We have been exploring the best opportunities for growth in terms of both our existing villages and our greenfield sites and are also determining which sites would deliver better value for shareholders through divestment. A number of sites were identified for potential divestment during the early stages of this review, and we're pleased to report the successful sale of Park Terrace in Christchurch for $42 million and Mount Eliza in Victoria for $35 million. This is in addition to the existing contracted sales at Karori and surplus land at Nellie Melba totaling $33 million. We will provide a further update on our land bank review at our Investor Day in February and expect to have identified sites to be retained for future development as well as additional sites for divestment. Now I'll hand over to Matt to run through the financials.

Thanks, Naomi. As my first half at Ryman, it has been fantastic getting to see the opportunity to unlock value in the business on a number of fronts, which I will touch on today. For the result, I'll talk to the financial highlights in our P&L, cash flow and valuations as well as speak to the refinancing update, which we announced earlier in the week. Starting with Slide 22. As Naomi has spoken to, we have made meaningful progress in the first half, which is reflected in these financial results. I'll call out 4 highlights on this slide. Firstly, we have seen a significant improvement in financial performance with losses before tax and fair value movements reducing $57.6 million year-on-year, underpinned by revenue growth of 13% and disciplined cost control.

Next, free cash flow of $56.2 million was positive, underpinned by strong net development cash flows and lower finance costs. And thirdly, acknowledging the quality of our $1 billion of unrealized development assets, which represents a material cash opportunity. Lastly, the full refinancing of our bank debt, which has extended average tenor to 5 years, improved pricing and introduced a fit-for-purpose covenant structure. The refinancing completes our balance sheet reset and provides a robust foundation to grow earnings.

Moving to Slide 24. Strong revenue growth is a notable highlight for the half, driven by the benefit of both our growing resident base, up 4% year-on-year in volume terms and stronger pricing in both aged care fees and retirement village fees. Year-on-year growth in DMF revenue includes a one-off adjustment for the prior year period relating to a historical GST issue, which was disclosed at the full year result. Removing this impact, DMF was broadly flat year-on-year. There are a number of factors at play here, including the changes to our pricing model as well as the accounting changes made in the prior year. If we look at independent units, we have moved from a 20% to a 30% DMF, but with revenue recognition period changing from 7 years to 9 years.

Similarly, service apartments have moved from the 20% to 30% DMF with recognition changing from 3 years to 4.5 years. This means that whilst the change in DMF contract terms is building a higher-value contract book, it will take time to flow through to the P&L, and this is shown in revenue in advance. In simple terms, revenue in advance represents DMF, which has been contractually accrued but not yet recognized in the P&L. The balance will underpin future DMF revenue. I would stress that our front book revenue profile across both DMF and weekly fees is significantly greater than the revenue in place from our back book, which supports our growth in years to come.

Slide 25 shows the significant progress we have made in our cost-out programs over the past year. Non-village expenses reduced half-on-half by 27% to $54 million, with the majority of this improvement coming from last year's restructure to support services. Adding to this is also some reallocation of costs to villages following these operational changes. Village expenses increased 7%, reflecting additional capacity, which has come online, noting that we have opened 5 main buildings in the past 18 months. While cost savings remains a key focus for the business, this is being approached in a considered way given the importance of the Ryman brand and our strong resident proposition.

Moving to Slide 26. Combining the revenue and cost improvements I've talked to, we have seen a $26.4 million year-on-year lift in operating EBITDAF to $40.1 million, a key measure we focus on internally to track the core operating performance of our business. I would note that this does not include any realized capital gains on retirement village ORAs, which are reflected in other metrics such as cash flow from existing operations. The chart shown on this slide shows the improvement with non-Village cost reduction and positive leverage in developing village growth providing the most benefit.

Moving to Slide 27. A key strategic priority for FY '26 has been segmenting our financials between aged care and the retirement village parts of the business, which we will report on going forward. I'd like to highlight that this is a non-GAAP disclosure, which currently sits outside of our financial statements. Segmentation is based on property type with the aged care segment comprising our care centers and the Retirement Village segment comprising our independent living units, service apartments as well as common areas and amenities. I should also make clear that home care services provided to a resident in RV are included in the Retirement Village segment.

Central to this analysis is the allocation of support services to each of the segments. A substantial amount of the support is provided through our office functions such as operations, clinical, procurement and contracting. Allocating these costs to the segments provides a complete picture of our cost structure and business performance. The output of this work provides metrics such as EBITDAF per aged care bed of approximately $15,000 on an annualized basis. For a scale operator such as Ryman, this is significantly below the full potential of our portfolio, and there are transformation projects underway to improve performance. It is also important to note that the figures shown on a per bed or unit metric are averages with variations seen throughout the portfolio. Our transformation progress will be reflected in these segment measures going forward.

Slide 28 details our cash flow from existing operations, or CFEO, for short, which is down year-on-year when excluding interest. Robust cash flow from village operations aligned with the improvement in operating EBITDAF has been offset by lower net cash flow from resales. Resales cash flow continued to be impacted by growth in our bought back stock, which grew $53 million in the half. Excluding this, our cash performance would have been meaningfully higher. I'd also highlight that we have made some refinements to our cash flow methodology. The most significant change is the allocation of interest on unsold new stock and land bank to development activities. Whilst much of this interest does not meet the criteria for capitalization, functionally, it still relates to our development business.

Other changes include the allocation of sales and marketing costs between CFEO and CFDA and similarly, reallocating costs on land bank sites such as rates or site security to CFDA. The composition of CFEO shows the improvement in village operations, but this is held back by gross receipts from resales compared with the previous half, which had the benefit of stronger sales. Totaled against lower non-village expenses and attributed interest costs, there was a slight improvement in overall CFEO.

Turning to Slide 29. We have seen strong net cash release from the development side of the business with our project spend reducing significantly as we sell down existing stock. The opportunity to release cash from inventory is substantial with approximately $470 million of new sales stock at 30 September. Consistent with my previous comments, the figures on this slide reflect our updated methodology with cost allocation to CFDA, including marketing and selling costs as well as allocating notional interest on unsold new stock and our land bank.

Slide 30 shows the positive free cash flow for the half, which was the first time in many years for Ryman. Free cash flow of $56 million was partly offset by a headwind of $42 million in other movements, primarily FX with the 3% decline in the New Zealand dollar for the period. While this has had a negative impact on the Australian dollar debt, I'd note that our Australian dollar assets have also seen an FX uplift, which is an offsetting benefit to our balance sheet and our NTA. And as Naomi has already highlighted, there have been subsequent land bank sales that will benefit our second half cash position.

Turning to asset valuations on Slide 31. Independent valuations across our sites consider unit and pricing information, capital spend and site-specific factors with further details in our presentation appendices. The half saw a positive fair value movement of $3.2 million, reflecting a number of changes, including price, but the outcome was broadly flat, taking into account FX and the previous result adjustment. There has also been a small impairment for 3 care centers as detailed in the financial statements, noting that the broader care portfolio is valued annually. The overall investment property carrying value and net tangible asset value remained broadly flat against the previous result.

My final slide on financial performance provides a summary of our profit and loss with per share measures, which I won't speak to in detail given most line items have already been covered. Earnings per share of negative $0.044 was down for the half with the improvement in operating earnings offset by lower fair value movements as well as the higher number of shares on issue following the February equity raise.

Now on Slide 34. As announced earlier in the week, we have successfully completed a full refinancing of our syndicated loan facilities. This extends our weighted average maturity to nearly 5 years with no maturities until FY '31. To achieve this, we have received strong support from our lending group who has recognized the turnaround that is underway at Ryman by providing funding out to 7 years. Our new ICR covenant is 1.50x adjusted EBITDA to interest, excluding interest on development debt. This designated development debt includes our committed developments that are in flight as well as recently completed care centers in New Zealand.

Importantly, our existing covenant waiver remains in place with first testing of the new covenant to apply from September 2026. Overall, this refinancing retains significant funding headroom of over $500 million and provides a strong foundation to support our strategy and long-term value creation.

Finishing my sections, I'll talk to treasury management on Slide 35. Since the equity raise earlier this year, we have delivered annualized interest savings of around $67 million, driven by lower debt following the February equity raise, positive free cash flow and a reduced cost of funds. With nearly 70% of drawn debt now on fixed rates and an average hedge tenor of 3 years, we have strong interest cost certainty. Combined with a lower debt profile post equity raise, this positions us for substantially reduced interest going forward.

Before I hand back to Naomi, I'd like to thank all the operational teams across Ryman's Villages as well as the development and support teams in Christchurch, Auckland and Melbourne that helped deliver these results. I'll now hand back to Naomi to talk to our outlook.

Thanks, Matt. On Slide 37, we have our updated full year sales guidance to 1,300 to 1,400 RV units. This reflects expected broadly flat total sales half-on-half in a mixed market with new stock delivery weighted to the first half and a lower level of new sales. In these numbers, we haven't assumed a recovery in the Auckland market, which makes up approximately 30% of our portfolio by number. We have increased our cost saving target for the year to $50 million to $60 million annualized.

We have also confirmed the top end of our build rate guidance for the year at 330 units and beds. And we have moderated our CapEx guidance, reflecting the release of contingency on a number of in-flight projects, which have completed as well as some timing -- cash timing impacts. And we take a more disciplined approach to sustaining CapEx in the existing villages.

Slide 38 gives you an update on the strategic priorities we announced at the time of the equity raise and what we said would be our focus in FY '26. I won't step through the slide as we've already covered each of these points through the presentation. But I would say we have made meaningful progress in releasing cash from the business, improving our performance and resetting the business for a return to disciplined growth.

Let me wrap up on Slide 39. Our near-term focus continues to be on building our sales momentum, releasing cash from the balance sheet and driving operational efficiency across the business. Ryman is positioned for significant cash flow growth as the housing market recovers, aged care funding reforms are enacted, our aging population grows strongly on both sides of the Tasman and aged care scarcity increases. And I'm looking forward to sharing more with you at our Investor Day in February on our refreshed strategy, focused approach to growth and new capital management framework, including our new dividend policy. I will now open up for Q&A.

Your first question comes from Bianca Murphy with UBS.

First question is just on future development -- no, sorry. My first question was on your commentary that you are signaling that you will be returning to disciplined growth again. But at the same time, we continue to see vacant stock increase as well as bought back stock. And I know it, of course, takes a few years to develop a village. But can you just touch on the confidence, I guess, that Ryman is ready to return to growth again given where your stock levels are?

I think I caught all of that. But I guess just talking to, first of all, the stock levels, what we've seen half-on-half is obviously build rate and new [ stock ] sales rate much more closely match each other. And that's what we're wanting to achieve in terms of moderating the rate of growth in our in-flight projects, which has seen us defer some of those later stages. We are intending to bring those stages forward as and when the market conditions support those developments, and that will be done on a progressive basis. And in terms of our greenfield land bank and sort of future expansion around the existing villages, that's something that we're intending to come back and talk about further at the Investor Day in February.

Okay. That's helpful. And then I believe you previously mentioned that you expect stock levels to peak in FY '26. Do you still expect that to be the case? And if so, is your expectation that will be first half or second half?

So in terms of the stock levels, we've obviously seen those increase through the first half with resales being at a slightly lower level compared to turnover. We are very actively working to get those to match each other with the range of sales effectiveness initiatives that we've got underway. We are also a little bit dependent on market conditions, particularly when it comes to the portfolio in Auckland. And ultimately, that's going to determine the exact point in time that we reach that point and start to see that cash come back down and the buyback level come back down. So probably can't predict more precisely than that, Bianca, but we're certainly working very hard to get to that as soon as we can.

Okay. And then yes, following up on that, could you just talk about what you're seeing in terms of market conditions in the first weeks of the second half?

Sure. Do you want to talk to that, Matt?

Sure. Thanks, Naomi. So Bianca, in terms of what we're seeing so far in the second half, but before I do that, just rewinding slightly to the first half, in the first half, we did see higher volume of new sales and good movement on new stock deliveries with the rate of move-in probably a little bit faster than expected. In H2, I would say that we're optimistic given the recent cuts to the OCR, but it's really too early to say how those cuts will translate in terms of an uplift in current conditions.

For October and November specifically, we've seen consistency with our first half sales performance, although we're entering this kind of quietly -- sorry, quiet seasonal period of December and January with this mixed market conditions as a backdrop. And as I said, optimism around the OCR cut, but it's too early to say how that will play through in the second half.

Your next question comes from Arie Dekker with Jarden.

First question, just on new sales stock and the ILUs in particular. Just given the influence of Australia in the first half. Just keen to get a bit of an indication of how much of that nearly 300 ILUs in new stock sits in Australia versus New Zealand? And then just related to that also, what your expectations are for pricing in Australia given the mix of stock that you have remaining there?

That's a very detailed question. We might have to come back to you offline as to the composition.

In the first half, Arie, one thing we'd point to is with the Nellie Melba final stage completing, we have had a number of sales come through from that. We had 76 units added in Nellie Melba. We are seeing good trading and market conditions over there, and that's a relatively recent thing. But we haven't, I don't think, provided quite the level of split that you've just asked us for in terms of the split between New Zealand and Australia. So that's probably the further detail we can provide around that.

Okay. No, sure. Just in terms of cost-out expectations, which have increased through the first half, which is clearly pleasing as you're spending more time in the business. I mean, could you just sort of characterize how far you've gone, I guess, in sort of peeling back the layers of the onion and whether your expectations would be that based on what's still to go that we could see further upsizing of that envelope through the balance of this year and into next year?

Thanks, Arie. So in terms of what we've seen so far is, obviously, we had $23 million last year. We initially expected $23 million this year. At the half, we've achieved $40 million. The current year savings are really across both non-village and village. I would say in emphasis areas, it's around the support services, as you would know, procurement as well, refurbishment CapEx and really village efficiency initiatives. It's really giving us the early gains that we're being able to talk to and now update and increase our guidance to the $50 million to $60 million. As we do more work, we'll be able to give you more confidence around the timing of that. But at this stage, not looking to change the original numbers in terms of total target.

I know I wasn't expecting you to. But what you're suggesting there is there is more work to do in terms of looking across the business and certainly potential for that to be increased further?

Yes. You'll remember, if you go back to the cap raise, Arie, we talked about a cash improvement target of $100 million to $150 million made up of a mix of cost and revenue. So that is still our overall target that we're working to. We've given you the cost indications to date. And one of the things we're mindful of is being able to give a clearer view around timing of when the revenue improvements will flow through as well. So that's probably something we're going to come back on in the new year with some further detail around it.

Great. Yes, that makes sense. And then just on the RAD retention benefit that's coming in, in Australia. I mean, what's your -- obviously, too early to see on the evidence, but I guess, just some comments on your expectations with regards how it might change the mix and the SKU of residents you see coming in on a DAP versus a RAD. Do you have any comments there?

I don't think we'd expect to see it change the mix, Arie. We've certainly seen a little bit of benefit ahead of the 1 November commencement for residents looking to avoid that new regime. It applies to new RADs from the 1st of November. But typically, it's driven based on the capital that individuals have access to. And it's also strongly linked with the tax and means testing settings in Australia. So it's fairly resident circumstance specific as to how those choices work rather than tied with that DMF retention.

Okay. No, that's good. And then just, I guess, returning and just asking a specific question back to the answer you've already given with regards to that the resales and improving volumes there to bring it more in line with turnover and then clearly, clear inventory as well. I guess just on the tools you're using, I guess we can't sort of see it come through at an aggregate level. And then also, there's obviously the phasing of it all and that in terms of settlements. But can you just talk to the extent to which you are using price as a tool in resales to increase volumes, whether you are doing that or not? And what sort of levels where it is being applied?

Sure. So we're using a range of initiatives, Arie, and price is really only one of those. I think we signaled at the full year that we would use pricing in a targeted way where we have building resale stock or where we have older new sales stock. I won't talk to sort of anything specific around discounting. It's obviously a competitive market. But price is certainly not the only thing we are doing. We have a range of other incentives and measures in place targeted at a village level and also have invested quite a bit in the training of our sales staff to really make sure that they've got sort of the right toolkit, the right range of incentives and are able to do a really great job at selling the new DMF offering, which they are really hitting their strides with. So it's a range of things with targeted pricing really just being one part of it.

Okay. And then just the last question for me, it's a quick one. Congratulations on the divestments of Mount Eliza and Park Terrace. Could you -- I may have missed it, but could you just comment on where those -- the values achieved for those versus the FY '25 book value?

Yes, they're broadly in line with book.

The next question comes from Will Twiss with Forsyth Barr.

Thanks for the extra disclosure on the Village and the care earnings. If we think about that $15,000 per bed EBITDAF in aggregate, can you give us an idea of what that looks like if we think about mature versus non-mature care centers? And then a follow-up to that, what is the split between what that looks like in Australia versus New Zealand?

Hi, Will. It's Matt. I'll talk to the Australia and New Zealand piece. So care in Australia is more profitable. It reflects the funding reforms that have occurred in that market. And whilst we're not providing the $15,000 EBITDAF per bed split between the 2 markets, you can see from the country segment reporting in Note 2 that Australia has a higher margin at a country level and the bulk of the P&L is care. So hopefully, that's helpful in terms of giving you an indication. And look, with the lower margin in New Zealand, it really is particularly as a result of the funding environment. So a scale operator like Ryman, we should be looking to get efficiencies from that scale, and we will from our transformation programs to improve performance.

But that said, lower earnings in New Zealand aged care is reflected in our valuations also, and we do need to see meaningful improvement in funding to support investment in new capacity. And just on that, the same applies to obviously mature versing immature care centers. This is a high fixed cost business. They benefit from occupancy. So you should expect obviously a lower margin in a more immature care center.

Okay. Great. But maybe if you could just give us a ballpark of where you think that EBITDAF per bed would be in a mature center today?

Yes. I think, the complex thing there is, obviously, the premiums we're realizing do vary quite a bit across the portfolio. So it's not a consistent position. It is region-specific. And I think in terms of perhaps that portfolio target in Australia and New Zealand, that's something we might come back in the new year and give you a further view on what we think a fully optimized position might get to, including the benefit of the sorts of aged care reforms that are being looked at in New Zealand.

Okay. No, that all makes sense. And then just moving to the village side. There's quite a big delta, sort of $50 million, $60 million between the village fees and the village OpEx. When can we sort of expect that delta to start closing materially? And then I guess, following up from that, is it still your expectation that over time, you can get these 2 lines to closer to breakeven?

Yes. Good question, Will. So focusing on RV, not care. Looking at the costs I should point out the cost is a blend of independent and serviced and the cost of delivering service is higher within that blend. You can see in the appendices that we've given the [ IA ] kind of unit fees of approximately $156 based on the current back book, if you can think about it this way, with the costs being at a current point in time.

My observation coming in as a CFO is this is an industry issue. It's affecting a number of operators in this kind of high inflationary environment. A large part of the reason that Ryman has lifted its fees after many years of keeping them flat is to partly address this issue. So the front book will address this in combination with some of the cost-out programs that we have underway, and that will close that gap on the RV side progressively over time, but it will take time.

Great. And then just last one from me. If we think about the kind of step down in maintenance CapEx in the first half, how should we be thinking about this as a base going forward?

I think the step down, and it's not a significant step down, Will, in terms of FY '25, it really just reflects a different level of cost discipline across the business and financial discipline across the business. We want to invest in the existing villages, but do that in a way that really is value-oriented. And so there will be some movement period-to-period based on opportunities, particularly where we can create value through investing in the villages. But in every dollar we're allocating, we are really making sure it is well spent, and that's reflected in the numbers.

[Operator Instructions] The next question comes from Stephen Ridgewell with Craigs Investment Partners.

Congratulations on the improved free cash flow results and progress on improved operating results. Look, I just wanted to touch on the operating EBITDAF result, which you called out earlier, Naomi was up sort of 200% or so off a low base. And then maybe also look at the resale gains because if we include that to the operating EBITDAF, that number is down 3%. So given the cash resale gains, look to be down about 34%. I just want to follow up on Arie's question on the decline in resale margins. Directionally, it's as expected but the magnitude does perhaps look a little bit steeper. And I just wanted to see if there were any call outs with regards to mix or other considerations? Or does that kind of fairly reflect the level of discounting that Ryman has connected over the half to clear the resale stock?

I think in terms of just what's driving that reduction, which is obviously not new to this half, Stephen. We see the HPI inflation in recent years as a significant factor. And remembering that in resales, about half is service departments, which are turning over on average in 4.5 years and half is independent at about 9 on average. And so particularly with service departments, you see that more recent lower level of house price inflation having an impact. And so that's sort of as significant a factor in terms of the resale margins.

The pricing, I think, is more of a factor in terms of mix as well. And so as we see newer villages making up a larger proportion in the volumes and not necessarily having the same level of resale gains just purely as a percentage terms in terms of house price inflation, that's also flowing through to sort of what you print in terms of that overall percentage margin change.

Okay. So you're calling out maybe a slightly younger average tenure potentially for those resales because just to -- I guess we did see a 540 bps sequential decline in independent gross resale margins on Slide 11 and 350 bps sequential on service. So that would seem a bit steeper than what we're seeing across the rest of the sector and the housing market generally. So it reads more -- without that color, did more discounting, but you're suggesting it's more of a mix shift. Is that right?

Look, I think it's a combination of those things, Stephen. So rather than one of them. And just to call out the -- we've obviously got the city villages as well as the regional ones. We've got the newer villages as well as the older ones. And then we've got the service department and independents in the mix and all of that overlaid with broadly flat HPI over the last 5 years or so. So those factors are all playing into that resales trend. But obviously, pricing is a factor as well.

Okay. And I guess if we look into the second half, I mean, are we going to see -- should we be seeing a stabilization in those, if you like, like-for-like resale margin trends? Or is this a fair read is this the new normal just given where the housing market is in this part of the cycle and what you need to do to get clear stock?

Look, it's obviously fairly mix dependent, Stephen, but I'd expect there's potential to further downward, but with perhaps a slower moderation in that in terms of where it trends, but very mix dependent in terms of where the sales are coming from.

Okay. And then just maybe one on the CapEx. I think it's been mentioned earlier that the CapEx guide was lowered a bit. Naomi, you sort of called out cost discipline. I was just wondering as well, though, does that pull down and what we're seeing is that the build rate is at the top end of the range, prior range and the CapEx guidance is lowered. Does that reflect perhaps lower CapEx going into next year or lower build rate going into next year? I'm just trying to interpret the moving parts there because typically, if your build rate was at the top end, you'd expect CapEx to be a little bit higher from where I sit. Just trying to understand that.

So the way I'd think about the build rate, Stephen, is really just that we're expecting to deliver in full to schedule rather than any change in development activity. In terms of the CapEx, there's a couple of things in that. One is that we have released meaningful contingency from some of the projects that we've completed, which is really pleasing. And then there's some timing in that. There's always a -- we're obviously completing Keith Park final, the current stages 8 and 9 near the year-end. We're getting towards the end of Northwood around the year-end. That just means you do sometimes have some timing impacts as to when that can flow through those projects. No change to schedule or delivery in any of that -- impacting any of that.

Okay. And maybe just one last one for me. Just on the volume guidance upgrade, it's obviously good to see. Just maybe a question on the mix. And Matt, you sort of called out kind of earlier that perhaps you'd see some improvement in continued improvement in resales in the second half, but new sales perhaps sort of dipping a little bit just given obviously the front books coming back. I mean I was just wondering if you could give us some indication of maybe how sharp that mix shift you might expect to see in the second half on the settlements. And I appreciate it's early days, but is it likely to be quite a different mix in the second half or incrementally different, if you like?

Yes, you had 2 kind of large tranches of stock come through in the first half in terms of Nellie Melba and Kevin Hickman. So those 2 definitely play a role in first half new sale performance, and you can see the mix from what we have disclosed in our trading updates and the result. So it probably is more of an even spread in H2 than what it was in H1, which had the benefit of those 2 large tranches. So I'm not going to give you specifics, Stephen, in terms of the combination of those factors into H2, but hopefully, that's directionally helpful.

The next question comes from Nick Mar with Macquarie.

Just following on from that. Just within the contracting rates, can you give us any idea of how that's looking on retail, just how close you're getting to the sort of termination run rate on a go-forward basis?

So Nick, I think you were asking how close is the resale contracting rate to matching the turnover rate? Did I hear that correctly?

Yes. So within that sort of $674 million of new sales contracts in the first half, how close that is to the $619 million of termination?

So we haven't given a specific split in terms of the guidance, but we are certainly seeing that gap narrow. And while resales is sort of below where we want it to be, we're chasing that hard to get back up to that turnover level, and that's a near-term focus for us. So that's a near-term goal we are working to chase down. We have indicated, I think, in the guidance that new sales are probably a bit lighter in the second half. And so you'll factor that into sort of the resales rate through that period in how you read that.

And Nick, just to add to that, not just for the target of achieving turnover, but also to the extent there's $330 million of stock value attributed to that, which is something -- which is a large prize for us to get after in terms of cash release.

Yes, absolutely. And do you think that the current set of incentives, tools, pricing, everything like that is enough to get you to that, notwithstanding sort of a material change in market conditions? Or are you sort of needing to wait for the market to pick up in Auckland to be able to actually execute on that piece?

I don't think we're waiting for the market to pick up, Nick. I think property is cyclical. We all know that, and we're chasing that down in the current market. It's just a little harder, particularly probably at the Auckland end. But certainly, in lots of markets, we're well exceeding that. And so our focus is on closing the gap.

Yes. So my question was in order to do that sort of nearer term, do you need to run more discounting or bigger incentives to get the cadence up?

Not necessarily. I think it's a matter of continuing what's occurring, which is really using the full range of sales initiatives and options we've got to drive near-term sales performance.

And I think you've seen, Nick, in the half that there's been a trend in sales effectiveness towards better conversion and that conversion rate of leads through to contracts, through to settlements has been one of the highlights of the half. So to the extent we can continue to build and develop those tools, it goes beyond price in terms of sales performance.

That's helpful. And then could you just talk through that resident funding trial that you've done kind of transfers to care and any intentions of sort of going back and allowing ORAs across other care beds in your portfolio and trying to sell down that way?

Yes. So I guess just starting with the resident. When it comes to care, our residents are coming either from within the village or often coming from outside the village. And so that resident fund product that we have trialed and are now rolling out is really about helping our residents transfer within the village and use the capital they have, whatever level of capital that might be to fund their care. We do also provide care in certain cases into service departments, and that's an ORA structure in terms of where that's used. But we also see daily accommodation premiums as a really important option because -- very often, care residents are coming to us at a difficult time in life. There's a lot of uncertainty around how long they might require care for and what level of care they might need.

And so we want to have the terms and offerings right to sort of match the residents' needs. High occupancy in care is key to profitability. And so having a range of pricing options is what's going to support that. And we think this new resident fund adds to the range of options that our residents have in coming into care.

Sorry, what specifically is the resident fund and what's the mechanism?

So it's effectively a capital amount that applies as a deposit to fund through both effectively the value on the capital as well as through drawdown of that amount to fund the care. So whatever level of capital an individual might have, they can use both the capital base and the drawdown from that to fund their care without needing to have separate funding or capital available to pay their room premiums. It effectively allows us to discount the room premium in using that capital in that way.

And then the last part of the question, are you considering sort of having ORAs available over the [ balanced ] care portfolio in New Zealand?

We see that as one option, and it's an option that's used today in service departments and care suites. As to the extent of broader use of it, that's something we'll keep considering in really matching the range of pricing options to what residents are looking for. Occupancy is critical in care. So we want to be able to maximize occupancy and realize the premium for the accommodation in a way that's aligned with how the resident is best able to fund that. And not everyone has a capital sum and not everyone is wanting to sign an IRA at a point where they are moving them or a family member into care.

There are no further questions from the phone lines at this time. I will now hand it to Hayden for rest of Q&A.

Your first online question is from David Kingston. Well done on an overall -- on the overall progress and positive free cash flow. When are you expecting positive EPS?

Yes. Thanks for the question, David. So EPS, as you'll see it in the face of the accounts, is driven pretty heavily by the fair value movements period-to-period. These are independent, hard to pick. You'll see from our fair value change from last year to this year, it was a substantial difference. But going forward, to the extent of build rate moderating and as well as valuation being stable, we wouldn't expect that to have the same degree of change. But that's the main factor affecting EPS beneath our operating performance.

Your second online question comes from [ Francois ]. Sales application trends beyond the reporting period of September 2025 with a split of ILUs and care suites, please?

Thanks, [ Francois ]. We're not going to give the complete split, but I would say that it's continuing at a very similar level of contracting post 30 September. Again, we're coming into this quiet kind of December, January period. But what we're seeing to date across October and November is at a very similar level of contracting.

There are no further online questions. I'll hand back to Naomi.

Thanks, Hayden. Thanks, everyone, for joining us today. Appreciate your time and look forward to giving you an update next year at Investor Day. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.

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 Piano 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 080-200-220. 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 Leighs 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 Anthony Leighs 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 our 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 leaned into 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 trans-Tasman 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 Corban, at Keith Park, James Wattie and Victoria Bert Newton villages. These main building serve as welcoming homes for our care and serviced apartment residents 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 serviced apartments 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 Hickman village on the 1st 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 lovely village home and get to enjoy these fantastic amenities, which include a heated pool, spa, cafe, library, Jim, Bowling Green, Cinema and Beauty Salon 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 it, 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 Ryder 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 town hall. It was humbling to hear of his contribution not only to this sector, but to athletics and to his other real passion, horseracing. 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 Farm in Northland is nearing completion and will soon be providing renewable energy to our villages through the innovative purchase agreement we've secured with Harbour Infrastructure and Mercury.

In Australia, we've secured a GreenPower 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 across 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 and care for New Zealanders and Australians. We need to find the right balance between care and commerciality.

Ryman 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 everyone 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 our 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 that 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 (sic) [ profit ] 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. 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 '25, 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 1 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 bank 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 villages 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 sharing more details with you on plans for the future later this financial year.

We've made significant inroads on our strategic priorities this year. 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 looked after with access to the levels of care they might need as their needs change. I want to finish by highlighting the investment proposition 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'm confident that we start FY '26 with a strong platform to improve shareholder value. We are the 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 capital raise. I want to thank you for your continued patience and support as we progress our business transformation. I look forward to updating you on 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. For 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 5 minutes 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 the interest of fairness to all shareholders attending this meeting, anyone wishing to ask questions if you can be as concise as possible and be 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 one question. David Kingston, K 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 ultimately there will be no rebound in shareholders' value to reflect the $4.18. Thank you.

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

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

As you'd be aware, David, the valuations performed both on the retirement village units and the care are independently done on both sides of the Tasman. Those valuations 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 NZX 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 good 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 is a truly iconic company that has led the retirement and aged care sector in New Zealand over the last 40 years as well as seeking your reelection today as an 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 I'm a Trustee for the Tania Dalton 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 and to 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 cements itself as New Zealand's leading retirement and aged care provider.

Ryman Healthcare 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 continue to -- 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 Naomi, but you 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 earn 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 IRR? 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 overspecifying developments or designing villages that are actually too grand. 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 to Scott Pritchard comes from [indiscernible]. 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 in office, in industrial, in residential, in hotel and in 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 Ryman. The reality and the belief and 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.

There's another question back into the room.

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 years you demolish it. 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 won't to have to ask, I'll pick that up. But -- so thank you for that. In terms of specifically on the resolution, are there any questions regards Scott? Okay. I now propose that Scott be reelected a Director of the company. Thank you. Please mark your voting cards now.

[Voting]

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, then one 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 any questions from shareholders online. 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 then 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 improvement in our bed revenue numbers, both in aged care and retirement living. We've reset our deferred management fee on new resident contracts.

As Naomi discussed, new contracts are up significantly on old contracts. And we've strengthened our balance sheet by raising $1 billion and reducing our gearing to 28%. So yes, I think we are seeing signs and we'd like to continue to show progress at the half year and the full year.

The second question was provided by [indiscernible]. 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 incentive measured over 3 years. The financial targets in the first 12 months were as disclosed, which is an 80% weighting of their short-term incentive has financially driven.

And they cover cash flow from existing operations, cash flow from development, operating cost reductions, sales and our or 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, are very much focused in 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. No prices for poor performance. You collect your remuneration regardless. Look, they are fair 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 we 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.

Thanks, Dean. We are supportive of the RVA 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 sensible approach. So we will continue to monitor the New Zealand process and make sure that our policy and position 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 management are very conscious of the life cycle of a village. In fact, we spent a lot of time yesterday at the Board meeting 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, whether we actually redevelop them on a stage process or whether there's a higher and better use at that time.

But at the moment, those points in time where we do reinvest, do push -- 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. Do we -- 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 one answer fits all for those things. There's been a variety of buildings built over time. Some with care, some with no care, 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.

[indiscernible]

No, we're think about that now. So let's come back into the room. This gentleman here.

Jim Burrows here. Hearing what you said about the large holding of land for future development. If you have to quit some of that land, is the zoning that land has got only suitable for aged care developments? Or can it be changed to residential housing developments or some of the zoning? Or is it just tie that you have to sell for another business in the same sort of business you're in?

Yes. No, every site in the land bank, 9 or 10-odd 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 if we think is not suitable for us going forward to request a rezoning of those things. 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 a shirt ? Or do you see yourself getting out of it with a slight profit or you must do these valuations?

Yes. Well, we haven't done that. 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 at $370 million, I think, across those sites.

[indiscernible]

In our balance sheet at the moment, they are valued independently at $370 million.

[indiscernible]

What we paid for that $70 million, I don't know that original cost because...

[indiscernible]

Under the accounting rules, we're required to value those in our accounts 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 that's...

[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 for holding it all the time. You want to cash out of it. Usually, quite often land that's been zoned for this sort of activity, you usually have to pay a premium to get it. You're going to get out of it. You're going to sell it to Somers you're going to sell it, you're going to a road through, but how's is the -- what's the actual getting out of 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 irrelevant to what the market price is today. They'll lend against today's value is what they'll lend against not cost.

They will lend 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 -- and apologies, I don't know the answer to that. Next question, please.

My question is, I am bitterly disappointed that you did not acknowledge the tragic death and preventable death of Elizabeth Nichols. I fully am 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 a woman in the North Island, that's newly come into the paper. And incidentally, my cat, Simba, in 2005, used to run the hills above Westmarland, and he had a tracking device. So 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 pointed out just acknowledging that passing. Our deepest condolences go out to Elizabeth's family. We've been in close contact, and we and our team were incredibly saddened by that event. In terms of tracking devices, specifically, it is one of the things that's actively being discussed with Health NZ because they set the pricing of aged care in New Zealand, 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 points you raised, we are very mindful of, and 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 dementia 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.

She was incredibly stressed. She was out of her normal environment. And yes, have a look at the statistics in the newspaper, we're all going to get dementia.

Next question, please.

Good morning. My name is Andrew Watt, 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 is just a bit over doubled now with the 2 capital raisings.

And I would like the board to consider when looking at capital management to consider an unhappy thought about things like another pandemic and suddenly your resales slowed down and you were still buying out exiting people. So taking 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 if external factors do 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 has 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, while we're there. 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 onside the business, got shareholders' capital. We've also got residents capital, some $5 billion of residence capital, and we've got bank capital. And the $5 billion, we owe that back to a relatively vulnerable community. That's an often a 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 concur.

Just another question. The Chief Executive talked about the demand for care beds growing. In a running 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 care 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 an independent one now. So we think about that and where that's transitioned. So in a managed way, people will be able to find a bed inside our village.

If it's extremely urgent, something has 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 bed available for that person when they come back because we're not running at 100% full 96 is 98%. So invariably, we do have capacity available.

So we'll be very conscious of providing that 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 residents suddenly does need care?

Naomi, it's quite an operational question. do you want to 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 apartments 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 it 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 is 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 it mildly to be forced to actually move somewhere else totally if they have to need care suddenly. 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 until we can secure at the right village.That's what we've done in some of those cases where that's occurred.

So they could move somewhere else, but you would work on getting them back in as soon as possible.

Absolutely.

I have one other question. Just with respect to sales units that have been vacated as opposed to the new developments. are you able to give any further update beyond the quarterly numbers that you gave about how resales are tracking?

Well, that was for 30 June, it was about 3 weeks ago. So we're not intending Andrew to have a weekly update. But hopefully, the move to a quarterly, which the business hasn't previously done, a good level of transparency for investors to be able to see that progress. So we'll be updating again post this quarter. Any more questions, please?

Yes. Malcolm, I'm speaking on behalf of my wife, who's sitting here, who's a current shareholder. I just wonder about the 40% increase in deferred management fees. There was a discussion at the last AGM about how Ryman had lost a lot of money basically by having fixed weekly fees. And I understand the policy has now changed, and you'll be able to update me on that. But the new ORAs have a choice of a fixed weekly fee or one which increases with inflation or something similar.

I just wonder how the market has accepted this. It's obviously costing people more. And I also wonder whether people actually -- when they are looking to move in, whether they really understand the difference between a fixed weekly fee and one which has inflation aspects. I mean, obviously, one can see that over the last few years, inflation has got very high. And of course, the fixed weekly fee doesn't move.

So I just wonder what has happened since you now have an additional 40% in the deferred management fee because that's a pretty big factor in people's retirement thinking.

Good questions. So I think the first point on that, that I would make, Malcolm, is that there was no change to existing contracts. So the 10,000 residents that live in either independent living or serviced, there was no change for them. But from the 1st of October, we changed for new contracts. And so we've moved from a 20% deferred management fee when the person vacates on the entry price to 30%, which is approximately a 40% increase, but it's gone from 20% to 30%.

And we looked at the numbers yesterday, approximately 90-plus percent are now signing up at 30%. So that's been good progress for us. In terms of the weeklies, again, no change to the existing [ 10,000 ] people. But for a new resident, we've offered a choice, which is exactly as you described, you can fix that for life or you can have a number that's lower, but will move up by the pension. And so very approximate in a New Zealand village. It's around $200 per week, plus you would inflate that with superannuation or it's approximately $245 if you wanted to fix that for life.

And what we're seeing, and as we talked about at the full year result, it's approximately half and half. People are choosing one or other, which is the feedback has been positive that people now have a choice on those things.

My name is Lance Bunting, and I'd like to ask these questions in support of all the shareholders. Could you please confirm that these financial figures demonstrate Ryman's current financial position. This info is freely available online on New Zealand Stock Exchange, Morningstar and Yahoo! Finance. And under the income statement, for year ending '25, it says revenue in for Ryman. $759.16 million, yet you still lost $436 million for the trading year, and total debt is $1.71 billion.

I say it again, $1.71 billion still total debt. My question is, how do you think you're ever going to get out of this nose dive unless you're forced to have another $1 billion capital raise. It appears to me that Ryman is using all the revenue in to service debt, interest, CapEx on old retirement villages and operating costs. There's no free cash. There's no money to build and develop and go forward with new villages or apartment units, which is the only downstream sales that generate cash and profits for a business like Ryman. So it's where you're going to go. It just appears as an impossible situation unless you're forced to have another $1 billion capital raise, which will put the shares at $1.50.

Thanks, Lance. As a Board, we believe there's a clear path through this. In terms of your numbers, the revenue of $752 million, that's effectively people's weekly care fees, weekly resident fees and the deferred management fee. And that translated at the bottom, as you said, to a loss of $450 million. A large part of that was one-off write-downs of investment property of care.

You had 2 capital raises of $1 billion. That's a lot of money to rip up, and we've got the shares sitting at $2.47. Now you've got another nose dive in front of you, explain how you're going to get out of it, if possible.

Yes. No, as I said in my speech, Lance, I think we have turned the corner. For your analogy of a nose dive, I think we have pulled out of that nose dive. We believe that result did not have the new capital in it in terms of interest saving. It did have a in that closing debt number. But in terms of the interest saving of $50 million a year that will come -- that's coming this financial year. In terms of business improvement, we've taken operating costs out.

And we also believe in terms of the stock that we've built up. We've got 12% vacancy at the moment. As Naomi talked about, we're looking to release over $500 million from already built, already available to sell units. So we can see a clear path to reduce that $1.7 billion worth of debt to a level that's manageable for the business. So what you don't see in those numbers is that ability to release capital through selling down that stock that we have just delivered in the last 12 to 18 months.

It's all future business. To reduce $1.7 billion of debt, you just can't literally generate enough free cash. It's basic arithmetic. I know you talk the efforts from the Board. You guys have got to face facts, you ripped up $2 billion. What's the next move?

Yes. I think, Lance, in our view, we do have a path through this. It doesn't require additional equity raising. We're very sensitive that we have raised capital of shareholders, and it's been a very challenging return for them. So I've acknowledged that. We don't believe that we require additional capital from shareholders. We believe that there is enough capacity in the balance sheet to pay that debt down through selling licenses to occupy for the buildings that we have delivered in the last 18 months, which we haven't sold yet.

We have not sold yet. So we have -- currently have 1,200 vacant units out of 10,000 units. So that's a 12% we've declared that. Even if you were to clear 1/3 of those 400 units, at roughly $800,000 has been an average realization in the last 12 months of a mixture of independent and there's $320 million by itself. And we've still got 8% vacant. So that vacancy piece, Lance, in my view and the Board's view is the way in which we can release capital and pay that debt down.

Well, I think that's a reasonable approach. But the shares at the moment at $2.47. Where do you anticipate with the good work you're planning in 12 months from now. What do you think Ryman's share price on a good day could be?

Yes. That's tempting to have a swing at that, but I won't. That's -- I think I'd be breaking some laws if I did that as without being a financial adviser.

Okay. Being fair, we'd expect it to move off $2.47. We'd expect it to move up. If it's still $2.47 or less, I think the whole Board yourself -- it should resolve in 12 months if it's still there. So there's is a challenge. If it's still $2.47 or less, you're all gone.

Yes, as I came on board 2 years ago, and that was with a clear mandate to create positive change. And it's been a hard 2 years as we've had to reset the business. I wasn't here for the first capital raise. We're certainly here for the second one. We've changed the Board. We've changed the leadership team, but the proof will be in the eating, and now I think we have to stand here and be accountable totally.

Just the last comment. With respect, Somerset shares at $11.50. You just made a statement in your entry speech that you're the Ryman -- the retirement market leader. It's not actually true. I would say Somerset is the market leader. And perhaps you guys can take a leaf out of Somerset's book. They sell the same number of units as you, 1,200, and they made $400 million. They didn't lose $400 million this year.

Fair comments.

The name is [indiscernible] Spring, and I'm quite amused at the meeting actually. So we could -- we can see the interesting side of it. Would you like to consult a crystal ball and give when we are going to get some dividends paid? And how much do you think dividends per share would be?

Yes, that's -- I'm not going to engage with that crystal ball actually. And I think the 2 questions are actually -- that's ultimately the challenge is what do you do with that level of debt? How do you pay that down is at what stage should you start paying out a dividend out of your cash. So that's obviously the contrast of options that we all have. So I think as we've committed to shareholders, we're reviewing that now, and we'll announce it this financial year. Some questions down here.

David Kingston, again, Chair. Look, I empathize for shareholders' frustration today because it has been a tough period. I'm fortunate, I'm a recent shareholder. I'm probably the only one here today who's slightly ahead. So I empathize for what's happened. Look, my issues are focused on shareholder value. Totally appreciate that you have 2 issues, shareholder value and resident experience.

Without good resident experience, you don't have a business. So I appreciate that the other side of it is very, very important. But a few comments to contextualize a couple of questions, Chair. And they're actually supportive comments of the new people. I think you're doing a good job. Look, Ryman is a fallen angel. It once was a glamorous star, but 2 to 3 years ago, the gloss fell off. It went from being an icon into the sin bin off the ground. People have said today, which is true, the woeful share price performance peaking at near $15 currently $2.40-ish. And as the gentleman before said, this is not an industry-wide malaise chair. Summerset has held up pretty well.

Other stocks I'll come back to, have performed so much better. So really, there are only 2 companies in this group that are performing badly, Ryman and also in Australia Lifestyle, and they got caught up in a very tough legal disputes. So I think they're an exception. But Ryman stands out as an underperformer. But I don't think that's the problem of current people. I think you're doing some good stuff. Look, to contextualize it, the current market cap is $2.5 billion share. If you deduct the $1.9 billion of issues in 2023 and 2025, it puts a value on the old Ryman, which is the responsibility of the old Board, the old management team of an appallingly low $600 million.

Don't need to calculate it, $2.5 billion minus $1.9 billion emergency issues raised, $600 million for the old Ryman is a very sad indictment. Look, smart people learn from mistakes. We all make mistakes, but smart people learn from them. What's gone wrong? Debt was ridiculously excessive. Gentleman refers to current debt. I think it's manageable, but it was excessive. Developments, as I said to Scott, in my opinion, are out of control.

Developments are exciting. Everyone likes doing a new development thing. But invariably, the return 8 times out of 10 is worse than the whiteboard. So I think developments have been a debacle. Clearly, the operational and corporate costs have been excessive. Good to hear Naomi, you're moving on that. And to be frank, Chair, I think the previous Board or management who signed off on 10-year fixed price contracts, that is reckless and cavalier. You cannot forecast in 10 years, sign off on fixed service fees for 10 years is mind-boggling and the 10-year arrangement. It reminds me, Chair of [ Ichor, ] the Greek God, who flew too close to the sun.

We know I do, sir, I'm [indiscernible] I think the context is relevant to the question. So the party came to an abrupt end, and we're now dealing with a painful hangover. Excessive debt has been fixed with 2 major share issues good. Cash flow is still negative $94 million, far too much being spent on risky development capital. Currently, as we've talked, 12% of vacant units. Huge change essential, I admire what you've done, and I admire Chair your apology I think that's good.

So yes, things are underway. Great that you've changed the resident contracts to more economic levels. And I accept it takes a while to turn around a seriously underperforming company. You addressed last year, Chair said you expected to target positive free cash flow. It didn't happen this year, but hopefully next year.

NTA down to 41.8%, but the stock trades at a 40% discount. Solution is, and I'll come to my questions in a minute. It all comes down to free cash flow. Every business is a function of free cash flow. You can have a period where no free cash flow, but ultimately, you've got to get free cash flow. It's the panacea that can repair investor faith in the Ryman, the Fallen Angel. The solution is clear, curtail development, sell some of the $370 million vacant sites.

In my opinion, Naomi's aim to release $500 million cash over 3 to 5 years. is a bit conservative. I appreciate you're very new, Niomi. I think you should be able to do that in 2 years. Like selling half the vacant sites and share, as you mentioned, reducing the vacancy from 12% to 8% releases another $300 million. Those 2 things alone can pull $500 million out. So look, I'm optimistic. I think the -- providing there's an urgency. I think the new Board, the new management team is a good team. I think shareholders should be patient, I think you are new. You inherited a lot of bad legacies.

My 2 questions are, do you believe that you can achieve the $500 million cash out in 1 to 2 years, rather than the 3 to 5 years? And do you believe you can improve the operational cash flow by the target $100 million to $150 million? You believe you can achieve that in the next 1 to 2 years. I think you're pulling out $46 million this year, Naomi. I would like to think that you can pull those numbers out in 1 to or 2 years.

And secondly -- second question is that the positive news also -- there's a lot of positives amongst the gloom, but there's a lot of interest in the sector. AVO was just purchased for $3.5 billion [Regis ] and aged care stock is at an all-time high in Australia. Lendlease is looking to sell its retirement villages. Arvida was bought by Stonepeak at a pretty good price in the last year or so. So there's a lot of interest, which is therefore, why I believe that you will be able to sell a number of those sites, undeveloped sites at a reasonable price.

In my view, not -- is there anything to do with the current Board, but the previous people, you've lost the right to grow. You have to stabilize the company first. So the other 2 questions. Are you confident of selling the undeveloped sites quickly? And can you expedite the $500 million cash out and the $150 million operational improvement?

Thanks, David. In terms of a lot of those points, we agree, and we are on our way to making those improvements. We've set those 3- to 5-year goals. Our ambition is to go faster. We're trying to go as fast as we can, but these things do take time. So I think the goals that we've set are very achievable, whether we can achieve them faster, time will tell. And I think this Board and management does believe we need to reearn the right to grow.

Hence the decision to cease new developments. It was a bike that was going very fast, and it developed speed wobbles in the way I think about that. And the only way as a youngster, I remember that fear going down the hill, the only way is to pull over. And so that's what we're doing. So we will need to regather. We believe there's an enormous amount of value to be released from the current business, let alone building increased villages. But if we can get that formula right again, which the business did have right for at least 30 years of its existence. If we can get that right and we have the capital capacity to do it, we will go back towards growth, but we need to demonstrate and rebuild that confidence.

Right. Next question, please.

[indiscernible]. My question is about valuations. In my experience, it seems that about 80% at a bit of a guess, and this doesn't just apply to Ryman, it's across the whole sector that people don't understand valuations and how each chain of villages arrives at valuing their properties. As I understand it, the valuation company stands alone has nothing to do with any valuations of houses or commercial buildings or anything else. How do they arrive at the valuation of retirement village properties? Do they consider the fluctuations in the housing market? Because I hear many people say that the money they get from the sale of their house is not going to be enough to buy them in a retirement -- into a retirement village. And that doesn't matter which chain of retirement villages. A few questions there, please.

Sure. So in terms of the valuers, firstly, they are independent of the Board, which I think is important for shareholders. And we don't seek to exercise judgment on top of that. So what their valuation is what we put into the accounts. I think that's the first point. Secondly, they are very experienced valuers across retirement living, commercial buildings, residential. So we use CBRE and James Long LaSalle across New Zealand and Australia, a credible organizations.

Their valuations are very detailed. They do it on a per resident basis per village. So I'd like to joke that when they push the button, the lights dim when their model runs, and they look at expectancy and what they expect house prices to be over time. And it's a detailed 25-year cash flow forecast where they're trying to estimate what house prices will do, which indicates what our unit prices will go up by in terms of the licenses to occupy.

So there's a lot of forecasting going in there of a no a known start of what people paid, the average age and what kind of capital we've got tied up and then it's a forecast for 25 years. So we need to trust their judgment as to what that is. And that's the valuations that we include in the balance sheet. So it's a very detailed exercise by them.

How often did those valuations occur?

They come to the villages annually, and they do a desktop every 6 months. So it's very frequent. Some might say, well, why do you do it even 6 monthly. So it's a very frequent exercise.

So in other words, it's very up to date.

Yes.

When you get to the last person asking a question, I'd like to make a comment, please, about Kevin Hickman.

We will do. Thank you.

Ross here. I would just like to know more. I appreciate that the situation Ryman finds itself in is due to the incompetence of previous directors and management. But I'd like to know more about the commitment you guys have got to the recovery in Ryman. I mean, with Ryman selling at roughly a 40% discount to NTA, if you guys have got real confidence in that, are you aggressively buying? Everybody knows there was a massive shortfall in the recent equity raise and the underwriters would have taken an absolute base on it. We all know that. Did you guys support it? Have you been buying since?

Yes. All directors who had shares participated fully in the rights issue that happened in February. So we all followed our money. There is a minimum share purchase requirement of all directors to over 5 years own the equivalent of their fees. Some of us are at that level now. Some are still acquiring shares. So again, we want them to put their money where their mouth is so that we are aligned.

You would have seen Naomi invest twice now in terms of demonstrating a high degree of confidence in what we can achieve at the business. And so I think that's a very good sign for investors that a new CEO is prepared to write a check and buy shares. And so yes, as I look at it, all the Board owned shares, we've continued to participate and new management have also bought shares as has the new CFO as we released to the stock exchange the other day.

Yes, I agree that it's great to see Naomi doing that.

Warren Buffett is CEO of Berkshire Hathaway was on $100,000 for many, many, many years. Maybe Naomi could look at that sort of a salary with the huge upside, there is to Ryman's stock.

Yes, Russell, I might get you to come and help me with my negotiation next year with Naomi. We'll open up at $100,000 to see how we go. But I think that alignment is a very important point, all joking to one side. I think having alignment and skin in the game is important and a very fair question..

My name is [ Aloette ], and I'm a shareholder as well as having a family that's under the care of Ryman, I have to say that generally, we've been very happy with the care that my mother has received. And I think she's probably outgrown the algorithm that was in place. So we're a beneficiary on the one side and losers on the other. I'm just thinking, though, that the model that Ryman started with 40 years ago, doesn't quite fit people's expectations about what elderly care will require, and it certainly isn't the kind of care that I want for myself in the future even though I know I will need care.

And I'm just wondering whether you're looking at that as a future way of changing the model, which may also, on the one hand, be more expensive for the people in the dementia years as opposed to people that are very fit and glamorously living the Hollywood dream and whether this is really what the government is going to pay for and what your shareholders are going to be interested in, in the future. And I don't know -- I'm sure you're very aware of all the points that I brought up. But I feel that you're always behind the game, and it's hard when you're a big unwieldy kind of organization.

So there are several questions in there, the future planning that you as a Board who are trying to save this colossus and working very hard at it aren't going to be, again, behind the 8 ball again when we need to look at this because obviously, the previous Board wasn't called to account soon enough. I'm not sure about what the problem was with that. But I'll leave those questions with you now, and I do have a few more to go on.

Why don't I answer the care piece first. Naomi, over to you.

Thank you for the comments and questions. And there are things that we're very mindful of as we work through our portfolio and strategy review. We know the trends are towards more in-home care. And people have in recent years lived for longer, and we're going through a big generational change as the boomers head into our target market and have both different expectations, but also different ability and capacity to pay for both care and retirement living.

So that's a key part of what we're looking at in that review to make sure we evolve the model to meet not just what demand looks like today, but how it is going to change. We do think the Ryman portfolio is really well positioned because of its weighting towards care and assisted living. And so that, that model of having the final move and knowing that the different levels of care are going to be available or assisted living at the point you or your partner might need them is a key part of that model.

And we are looking at how we evolve it with the change in demographics, government policy and demand that is coming. But there's as much opportunity in that as there is things we're going to need to manage around some of the risks. So they're really good points you raised, and we're very mindful of them.

Because I do think you have to evolve certain parts of your business to move forward and develop a new model ahead of well, I don't know what's happening in other residential peers. But the issue of capital gains when people sell the units hasn't been discussed at all. And I'm just wondering whether the government is going to push ahead with that or whether you are going to be under pressure when units come back on the market. and it will change the profitability of those units.

Yes. We're not seeing any pressure to move to that model in New Zealand. There is a range of choices in the Australian market with some competitors share the capital gain, but take a higher DMF. Then there's a discussion of who does the refurbishment that's often shared, who pays the selling and marketing cost that's often shared. And it's kind of an unknown risk reward at the end of the day.

So I am quite surprised that you don't feel under any pressure in New Zealand because...

All our competitors are the same. They're all on a deferred management fee. And I think people like that model and our feedback and you talk to our competitors in Australia when they offer the choice, the vast majority of people want to know what that fee will be when they depart, and their families want to know that fee when they depart. So having that fixed on the way in, I actually think is a better option for people.

And certainly, that's the feedback that we get from people that they like that piece. It's the industry norm in New Zealand getting no pressure from people to switch that model, which -- in which case, you have to reset all the economics at that stage.

So you're saying you use that as a trade-off.

Sorry, trade-off, what do you mean by trade-off?

Not staying with the price and then the depreciation and then the deferred fee rather than offering a capital gains on that unit.

Yes, the deferred fee is on the opening price and the cost to refurbish falls to us, the cost to resell that unit falls to us that clarity of the person knows that the weekly fee, that fee at the end is all they will need to pay throughout their life. Okay.

Now the other question I have, like being a shareholder, it would be really helpful for me if you didn't use so many abbreviations. I know that for other people, they might be clear is, but when I'm looking at the screen, I'm sorry...

Apologies...

And my last statement really is a statement rather than a question, it's just to say good luck here.

Thank you, Look, we really appreciate the interest and contribution and questions. And we're trying our best. Yes, it could be a short meeting next year. Yes, we might briefly go to online before we come back and I'm conscious we've had the floor open for a while. But at the end of the day, that's good. I have a question received from Joshua Fong. First of all, a warm welcome to the new CEO and CFO. I'm also very pleased as a shareholder to see the various initiatives already put in place. I understand the recent rights issue was fully underwritten. And because entitlement shareholders did not take up their full entitlements, the underwriters have taken up the unsubscribed rights.

My question is how many of these underwritten shares are still held by the underwriters and sub-underwriters? [indiscernible] great call for making it a fully underwritten rights issue. Thank you, Jason. Look, as we disclosed with our institutional offer and then the retail offer. Of the roughly 328 million shares that were raised, 53 million were not taken up by shareholders in their right or in their over entitlements, leaving 53 million to fall to the underwriters and the sub underwriters, and we had visibility on the sub-underwriters, and that was primarily our existing large institutional shareholders.

We're not aware that stock is still held by the investment banks. And as I said, most of the sub underwriters were long-standing Ryman investors. We're not sure how much of that is trade since. So if the question is leading towards, is there an overhang, not to our knowledge.

Are there no more online questions, Hayden? What is happening to the land at John Ryman Place? [indiscernible] Auckland? So that is the Kohimarama property, the leasehold property that we've got there. That's in our land bank, and that's part of the current review as to whether we retain that or divest that. So that will be as part of our announcements later in the year when we work through strategy.

Question asked by Joshua Fong. Recently, in Victoria, there was a ruling against lifestyle communities read their deferred management fees policies. Would that have any impact on our operations in Victoria? No, the answer is no. The -- one of the issues that lifestyle communities had and David referred to it as well, was a fee was coming off the final value, not the opening value.

And under legislation there because it's not a known fee that was breaking the law. Their rules there, you have to be explicit about the cost to live in that village. And they couldn't be explicit because you didn't know what the value would be. And so those deferred management fees are being ruled apparently as a legal in Australia. Under our contracts are always on the opening price. And so the incoming resident is fully aware of what the deferred management fee is. And so we are fully compliant with law in Victoria. So that ruling will have no impact on Ryman.

Any more questions, Hayden, from online? From Benjamin Ruffel. Has the Board given any thought to a Bitcoin treasury strategy? The acquisition of the scarce digital real estate using a small portion of earnings has been demonstrated by several companies overseas as an intelligent strategy for driving shareholder returns. The first-mover advantage on the NZX has not yet been taken.

Thank you, Benjamin. I must admit this is not something that we've been considering. And yes, it's unlikely that we'll consider that. Anything else online?

Are you going to hold future AGMs in Auckland or all future AGMs in Christchurch? Look, I personally think this venue has worked well for us for a couple of years. But that's not the first question I've received either at this AGM or when I'm going to our villages. I'm conscious we've opened a number of new villages in Auckland. So I think the Board will consider whether we should move it around to give residents and shareholders in other communities, the chance to meet us face-to-face. We'll have to consider that.

A question from Koushik Patel. Having lost most of our value and coming back to shareholders for more equity twice in the last 18 months has been painful. And I failed to understand what Board, I had understanding of fast changing of what the Board had in understanding of the fast-changing markets in the sector. Also, please note, Summerset has managed to perform and secure shareholder value. Please note, any further financial write-offs should completely destroy credibility. It has to be absolute hands on board, not just getting comfortable with sitting on your fees and they should invest in Ryman.

Look, I think as I've acknowledged, we apologize for the performance for shareholders over that time. Your new Board is very focused on rebuilding that value. And the comment around Summerset, yes, while there has been some factors that have been common to all of us, they have been very much compounded here at Ryman. So I'm not looking to point the blame at anywhere but our own performance.

A question from Kennedy Menacom. Please explain the full write-off of deferred tax assets.

So historically, we have accrued deferred tax assets in our balance sheet. And they have been above our deferred tax liabilities. So we've actually carried a positive balance. What we chose to do and what is more consistent with others in the industry, is to have deferred tax assets no greater than our deferred tax liabilities. So that required us to write off our excess tax losses from an accounting perspective. What I would say importantly is those tax losses are still available to us. So from an accounting perspective, we've chosen a more conservative stance. Those tax losses are not lost to the organization going forward.

A question from John Rodgerson, regarding Board cleanouts. I would recommend that shareholders watch Dean's interview on the Markets with Madison YouTube channel for a clearer picture on this. Thank you, John.

Are there any other questions online? Okay -- aren't getting too cold out there. From Shane Laurent, Retirement Villages do not have capital gains because they do not sell in any investment property residents. Capital gain is a defined term indictionary.com property must be sold. The gain on sale of property bonds or shares. Retirement Village have cash gains, which is the difference between the next resident entry payment and the outgoing resident entry payment.

That's correct, Shane. We sell a license to occupy. We do not sell our buildings. And those changes in value are not taxable because we're effectively not selling the property. We're selling a property right for that person to have that as their home for as long as they wish, but there's a license to occupy, not a sale. So Shane, you're correct.

From Andrew Mackenzie. Have there been any updates from the government around funding for care beds?

Naomi?

Thank you. So we have seen a 4% uplift in care funding from the New Zealand government this year, which is a step in the right direction. It's not yet enough though in terms of getting the government-funded care fees in New Zealand to the level they need to be, both to cover costs but also to support our return for shareholders on our investments that are being made and need to be made in new capacity for aged care in New Zealand. So that's something that we're actively discussing with the New Zealand government, both directly and as well as through the Aged Care Association and are really focused on making sure we get the funding model in New Zealand to a sustainable setup long term and have the investment being made that is needed in this sector.

We're cautiously optimistic, Naomi, aren't we? We are, particularly as we've seen what we think is the blueprint in Australia.

Next question from Andrew Tucky. At Edmund Hillary, substantial repairs are being done to a building built over fill. This was known as preloading sink substantially. Are there much more robust processes in place to identify and redesign when these issues are encountered? Yes, it's certainly at the Edmund Hillary Villare, it's very site specific. The site had been used as a quarry.

The main relevering works are now complete at the village and the hospital being now fully reopened. I do apologize for the inconvenience for residents. That is not something that we had anticipated would occur. Certainly, some learnings from this. It's been a very significant process and obviously unsettling for residents. Hopefully, we're now through that, but some good learnings.

Any other questions?

From Robert Hayward, what are the potential financial implications of the growing groundswell of discontent as seen in the media from retirement village residents generally about the equity and delays in settlement about payout on the sale of occupation rights. I think Naomi mentioned that earlier. We are supportive of the Village Association review, and we are monitoring that.

As I said, Victoria -- I think Naomi said Victoria has recently said, require mandatory repayment no later than 12 months. Now this seems to be a sensible approach. Currently, we repay within 6 months. So I think the industry unsettlement certainly not at Ryman. When I have met and if you have met as well with the Retirement Villages Association, they do hold us out as the gold standard in terms of how we behave with departing residents, ceasing our weekly lease immediately and repaying the capital.

Asked by Raul, is aged care profitable? If not, what is the plan to achieve profit? As we've disclosed and Naomi has reiterated, we're looking to provide disclosure at the latest at the full year accounts on the relative profitability of care and retirement living. So we'll have that debate at the time. And a part of it is obviously subject to where you allocate overhead inside a village whether it's to care or retirement living. So we're very conscious that shareholders would like to see that. And so we're leaning in for that. So hopefully, when we stand last -- next year, we can have that discussion on the relative profitability.

There are no further questions online.

Thank you. I'm conscious of time, and we're going to have a finishing statement here. Are there any questions? Great. Maybe a closing statement here would be nice. Thank you.

Like Dean said, he was at the funeral of Kevin Hickman. And I'm sure that the Ryman staff here today, most of you would have been together with people in the audience. But for people who are watching this online, most of you will not have had the opportunity to attend Kevin Hickman's funeral in the Christchurch Town Hall. It was an amazing event.

And in the [indiscernible], he made the comment that when Kevin Hickman realized it was time to hand over to, I think, Simon Challies, he left a note on Simon's [indiscernible] and he said, it's all yours, mate, don't muck it up. And at that time, I had occasion to talk to a friend who asked my advice about what she should do in relation to a very large company that has its head office in Auckland.

So I suggested to this person, what she should do. And I couldn't believe that when it all went wrong. And so I said to her, you should do so. And then I thought about this and realized because she Coles had not had any involvement in this company and not a known person, it was going to be difficult.

So I said to her, I'll sort it for you. So an event was being held in Auckland and I've been to Auckland. I was introduced to a new staff member who had been the person who dealt with my friends question for want of a better word or situation really. And when I was introduced to him, he said, you're from [ Kashy. ] I said, yes, I think he's been told about it. So when we got to sitting down at this event, I was quite near to him, so I thought there's my chance to talk to him.

So I sidled up to him and a guy about 40-ish, I said, tell me about your work history. And he said, my work history? I said, yes, I think that's a reasonable question. So he proceeded to tell me what he's done. I'm not sure I believed at all, but the Managing Director of the company is a very astute person. So at the end of his speel, I said to him, you've fallen on your feet with a job with this company. She doesn't suffer [indiscernible] fields gladly, so don't muck it up. He had no response to what I see. So thank you to Kevin Hickman and everyone knows, especially if you live in what Kevin Hickman, together with his partner, John Ryder did for Ryman. Thank you.

And lovely to have Joanna Hickman here today as well. With no further questions at this time, I now bring the 2025 AGM to a close. I would like to thank you for your attendance here today and invite those of you present to enjoy light refreshments with the Board and Executive. I would also like to acknowledge the clear passion and interest that you all have in this business. I look forward to having a more optimistic discussion with you in 12 months' time, where hopefully we can deliver more positive news. This Board is very committed to rebuilding the value. So I appreciate your patience. I appreciate your time and your questions. Thank you very much.