Good day, and thank you for standing by. Welcome to the Arvida Group Investor Conference Call. At this time, all participants are on a listen-only mode. After the speaker presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, to the CEO, Jeremy Nicoll. Please go ahead. Thank you. Morning, everybody, and thank you for joining us for the FY 2022 annual results call. I'm pleased to advise that the net profit after tax for the year was NZD 199 million, up 52% on the prior period. We resulted in an underlying profit of NZD 73.5 million, up NZD 21.6 million on the prior period. It has been a challenging year with the pandemic impacting us across most of the year. As you'll recall, we had lockdowns in August- December, and then this year we've been dealing with the pandemic as it spread through the country. At this stage, I'd just like to say thank you to all of my team that have worked tirelessly, especially in the aged care facilities, to keep our residents safe and to look after their teammates. It's been a tough year for them, but they've performed incredibly well in the situation. We did have some additional costs in relation to managing the pandemic, which were around NZD 5 million during the current financial year. The other big change for the year was the acquisition of the Arena Living portfolio. This has increased our total assets to NZD 3.4 billion. We completed the transaction on the November 15th, and now the fair value of that portfolio is NZD 70 million higher than the acquisition price. Thank you all to the investors on the line that assisted us with the capital raising. Your support for the ongoing strategy of Arvida is greatly appreciated. We do believe that the addition of the Arena Living portfolio has transformed our business, with excellent villages in those prime locations of Auckland and Tauranga. On the back of the Arena Living transaction, our embedded value is now a touch under NZD 1 billion, which has more than doubled over the financial year. With the increases in the fair value and the Arena Living acquisition, our net tangible assets per share is up 26% to NZD 1.84. We've managed to keep our gearing at the low end of our target range at 25%. In terms of our construction business, we exceeded the target of 200+ for the year with 221 new units delivered. The sales team had an excellent year settling 580 units across the year, despite the disruption from COVID, which is up considerably on the prior period. The overall portfolio is up just over 1,000 units. We have divested four sites over the year as well. Those were mainly smaller, care-heavy centers in the greater Christchurch area, as we are sort of moving away from some of those traditional care beds into the care suite products. Overall occupancy for the year was at 94%. We maintained a good level of occupancy for the first three quarters, and then occupancy in the fourth quarter was impacted, as some facilities were unable to take new admissions, either due to the pandemic outbreak or registered nurse shortages. Those care centers, we do have 73% of them with the gold standard four-year certification. The sites that I mentioned before that we divested all had four-year certification. In terms of the care operations in a bit more detail, on page five of the investor presentation, you'll see there that the number of care beds has dropped over the last five years, but the number of care suites is slowly increasing. We have seen a squeeze on care margins, mainly due to the additional costs of staffing and the COVID response. We are working very closely with the NZACA on the upcoming funding round, with an announcement expected in June for the new DHB rates that have effect from the first of July. In terms of our village operations, as you can see on the chart on page 6, there's been strong growth in the number of retirement units up to just under 4,000 units. We've seen our deferred management fee revenue line increase from NZD 33 million up to NZD 49 million over the year. In terms of our Good Friends business, we celebrated our first anniversary last month. The facility itself is going exceptionally well. There's now more than 550 members that are accessing our services regularly on site, whether that's the ride share transport service or the age-appropriate gym and swimming pool, activities area, and our Allied Health offering on site as well. The provision of home care has been challenged in the current market, especially with the merger of the DHB, meaning there's no new contracts being provided. In terms of some of our key indicators for our business, our NPS scores, again, were extremely strong, with Village at +42 and Care at +45. We did the survey in November, December of last year, so it was after a particularly challenging period of lockdowns in the country. We're very, very pleased to have maintained those high levels of net promoter scores. We also launched our first brand campaign for Arvida in February. Hopefully, you will have seen some of the TVCs or bus backs. It's been a really important piece for us to promote the brand Arvida, especially as we start to launch into building more communities and see those sales numbers up to 580 in FY 2022. It's just to provide that additional level of support as we move forward. In terms of our staff, we've got about 2,700 staff across the business, all highly engaged and valuing what we've done. In terms of the portfolio activity, as I said before, the net change has been just over 1,000 units added to the portfolio, mainly through the Arena transaction. That was offset by the divestment of the four sites. We have taken on a lease at the Lake Waikaremoana Care Center, and we've also completed the development activity of 221 new units. In terms of that development pipeline, we did add greenfield sites at Waikanae Beach and Te Awamutu during the year, and that development pipeline is now just over 1,900 units. As you can see on slide 11, the delivery during the year was largely villa. Villa product has been selling extremely well across the business. We also did deliver the new care center at Rhodes on Cashmere, so that will complete our development at that site. We're currently finishing the soft fit-out and nearly ready to launch sales of that facility. Sales at our two greenfield sites that are operational, Te Puna Waiora and Waimea Plains, have been going extremely well. They continue to have demand in excess of supply, so that does give us good confidence as we move forward into FY 2023 with an increased build target of 250+. You can see some lovely pictures of the different types of products that we have delivered through the year. As I said before, the villa product sales have gone extremely well. We have seen heightened levels of inquiry coming through the pandemic, with people seeking to be part of a retirement community, for safety, for that community feeling, and also for that ability to transition through to care. In terms of the master planning at the Arena Living, we have recently been consulting with our new residents at Mayfair in Auckland about a redevelopment of their apartment building and an upgrade to their community center. We will be undertaking that construction in FY 2024. We will be delivering 57 brand-new apartments with a better mix of more two-bedroom units than there currently, and an upgraded community center. We are still working on master planning for some of the other sites and still see opportunities for redevelopment, the implementation of a care suite strategy at some sites and further brownfield development as well. On page 17, just some aerial shots of those two new greenfield sites, one on the left at Waikanae Beach. Very exciting site backing onto the golf course. First stage of villas there will be under construction in the current year. On the right is Te Awamutu. As you can see there's a fair amount of enabling works have been undertaken already. Again, looking to start construction on villas on that site during the current financial year. At this stage, I'll hand over to Mark Wells to run through the financial section. Good morning, everybody. We're pleased to report net profit for FY 2022 of NZD 98.9 million. This was led by strong fair value gains of NZD 156 million, along with the gain on the acquisition of the Arena entities, growth in the fees and DMS from increased sales. The increased operations, the growth is increased in operating expenses, which also includes NZD 5 million of COVID-related costs. In terms of ORA resales, we continued the trend of very strong second half with total sales of 337 units with increased margins to an average of 26%. This was helped by the Arena Villages village sales, where average was 48%. Total gains for the year are NZD 43.4 million. It's an increase of 67% year-over-year. Over the page, it highlights the embedded value increase up to NZD 977 million, which now includes the Arena Living. We have increased prices and helped the embedded value to the resale gains, NZD 612 million, with deferred management fees of NZD 365 million. Just touch on the graph on the bottom right. It's a good highlight of the unit affordability in the village surrounding catchments. Just moving on to the new sale for the year. It was a very strong year, with increases to 243 units. This reflects the increased stock delivered and strong pre-sales. Total development gains was 25.2 million with a margin of 17%. The underlying profit reconciliation has increased by 42% for the year to 73.5 million. The graph on the bottom left highlights the movements with the new villages at Arena Living above expectations at nearly NZD 15 million. Earnings per share is now at NZD 0.12 per share, which is an increase of 25%. In terms of the balance sheet, total assets are now at NZD 3.4 billion with strong growth in the investment properties. Net tangible assets have increased 26% to NZD 1.84, and that follows the successful capital raise with 174 million new shares added throughout the year. Moving on to the graph on the investment property highlights the growth and then in this line to over NZD 3 billion. Our solid revaluation gains for the year of NZD 159 million, especially in the villages with recent development activity. It also shows the Arena villages increased NZD 23 million for the 4.5 months since acquisition. Moving on to the cash flows. Net operating activities cash flow increased to NZD 152 million, which is up 16%, and this reflects the increased operations of the group. There are also a number of move-in early sales at year-end, where the funds have now been received following March 31. There are also a number of internal transfers at that time. Just flipping over to page 33, dividends and DRP. We've declared the six months dividend to March 31 2022 at NZD 0.03 cents per share with a total of NZD 5.5 cents for the year. The DRP will continue with a discount of 2%. We'll now pause for questions, and I'll hand back to Glenn. Thank you, sir. As a reminder to ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound or hash key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andrew Steele from Jarden. Please go ahead. Good morning, guys. The first one for me is just on OpEx. It was clearly a quite distorted period with the Arena acquisition, ongoing COVID, costs. As you've highlighted, there's ongoing margin pressure on aged care. If I look at the revenue growth versus OpEx in this year, which OpEx grew ahead of revenue, you know, how should we think about it going forward? What sort of a reasonable level of underlying cost inflation, and do you expect it to outpace your revenue growth? Yeah. Look, the key component to that will be what happens with the funding round from July 1. You know, there have been increased costs in the care side of the business, and we will be expecting a good level of increase to come through on that revenue line as well. What you'll see next year is that you'll see the care fee line increase, and you'll see some marked increases in the deferred management fee line as well, with Arena being involved for a full 12 months as well. Just on the part of the question regarding what's a reasonable level of underlying cost inflation for the year ahead. You'd expect to see it, stripping out any differences in relation to timing of Arena and the COVID costs. You'd expect it to be increasing at around about inflation levels, so it'll be around that 5%-6%. Great. Thanks, Jeremy. Just on, in terms of your cash flow, if I look at your underlying NPAT and exclude developer margin and, sorry, not Arena, your Verge Park JV, and then look at your cash flow ex development sales. Your underlying NPAT ex development grew 37%, but your cash flow excluding development sales declined by 25%. I take it Mark highlighted there were some late sort of transactions which completed post year-end. Could you sort of explain what are the moving parts as to why your NPAT grew so strongly and your cash flow declined on a core basis? Yeah. Some of the impact will be around Arena as well in terms of it is changing the mix of how things move forward with deferred management fees being accrued on a IFRS basis, but not yet received from a realized DMS point of view. There will be some normalization on that over the next year as we get to a point where we've got Arena within the portfolio for a full 12 months. Can you just call out what sort of quantum the late sales were? That was around NZD 20 million. Just to be clear, those were all recognized in the P&L? Yes, correct. Great. Thanks. Just on the goodwill impairment in this year was quite large. Could you just talk through specifically which assets they're related to and, you know, what valuation component drove, I guess, them failing to meet the impairment test? If you take a step backwards first before we answer that question. In terms of the goodwill on our balance sheet, it is in relation to acquisitions of care facility businesses. It's probably a bit different to what you see on other operators' balance sheets. Every year we are required to look at what the fair value from the value is. Which is you take a cost to dispose of and then compare that to the carrying value of the assets and the goodwill. What we've seen over time is that values of land and buildings increase and the value of the core component of the operating business of the care facilities decreases. That then just flows through into that goodwill impairment calc. Thanks, Jeremy. Do you want to just call out which assets they're related to? In the note to the accounts, there is some disclosure there that talks about the number of CGUs that were reviewed for impairment purposes. I think there was 18 of them. I think it was all bar four there were signs of impairment. It's nothing, there's no particular asset there. We also wrote off the goodwill in relation to some of the divested care centers as well. Great. That's very clear. Just a final one for me. Given ongoing construction cost inflation, where do you expect development margin to be for FY 2023? For the development guidance for the year ahead, what's the sort of quantum of development CapEx that would be reasonable to be associated with that? Yeah. The guidance going for FY 2023 is over 250 units. In terms of the development margin, we do expect that it will continue to be consistent at 17%, which was the number we delivered at FY 2022. In terms of the construction spend itself, we'd expect to see that increase slightly as the build rate is going up. We expect that expenditure to be getting up towards NZD 200 million. That's great. That's all for me. Thank you, guys. Thank you. Our next question comes from the line of Aaron Ibbotson from Forsyth Barr. Please go ahead. Hi there. Good morning. If I could just rattle through a few questions. Firstly, just for clarity, around these NZD 5 million of COVID costs that you're calling out. You know, when you talk about 5%-6% underlying inflation, is that sort of including or excluding these COVID costs? A re you expecting some of this to drop out and that the rest will be 5%-6% inflation, or how should we think about that? Thank you. Yeah. That's excluding those COVID costs. There will be a continuation of some costs going into this year. Obviously, we still are in the midst of the pandemic. Obviously, the numbers of our residents with COVID and staff with COVID currently are a lot less than they were a couple of months back. There is still some ongoing impact, as well as impact on occupancy in Q1. Thank you. Secondly, just on resale, there's a few big moving parts, not least, Arena Living going into FY 2023. I just wondered if you could share with us, I'm sure I can figure it out through the accounts, but what the sort of resale embedded value currently tell you about average resale margin in your book, inclusive of Arena Living? Is that something you're willing to share? Yeah. If you on page 21 of the pack, you can see there the resale margin in the years pre-Arena was around 23%, and then it lifted to 26% in FY 2022. We do expect that we will continue to see some increase in that resale margin in FY 2023 as we have Arena for a full 12-month period. We did see that increase occur post-completion of the deal. Sorry, but just to be clear, I was just wondering if you could give a blended average, sort of, you know, how much higher your EV sits relative to your NAV price, if you see what I mean. What is the current resale margins implied by your embedded value that you do disclose? Yeah. I'll come back to you, Aaron, later on. Okay, no worries. Secondly or thirdly, I guess, how should we think about the mix of inorganic versus organic growth over the next few years? You know, I guess currently, Arvida is slightly below book value. How do you think about, you know, ability to sort of continue acquire inorganically versus just build organically over the next year or a couple of years? Yeah. The focus of the team at the moment is on the organic development. We do have just over 1,900 units within that pipeline, so there's a significant amount of broad runway there. We have settled on two new pieces of greenfield land for new villages during the year. As you say, with the share prices trading below where NTA is at. It does make it a little bit more challenging to raise capital to fund an acquisition. Fair enough. Finally, you normally have quite insightful comments or thoughts around, you know, where funding rounds may or may not come out. Are you willing to share any more thoughts than what you did in your initial presentation? Just, you know, how it's going, what do you think are the key crunch points? You know, some of your colleagues have sort of suggested that we're getting close to sort of a must solution with CapEx actually exiting the system, but keen to hear your thoughts. Yeah. Look, thank you for noting that I have been pretty accurate in the past in terms of my estimates. This year, I'm a bit unsure about where it's gonna land. I think at a minimum it'll be 6%. I think the maximum will be just over 10%. Oh. The big piece there is pay parity for nurses. If pay parity for nurses comes through in this year's funding, it will probably be just over 10%, so 11 or 12, I'd say. If pay parity is not included, you know, expect the funding rate to go up by 6%. Yeah, I'm gonna hedge my bets and say two numbers this year. Okay. Very good. Thank you very much. Thank you. Cheers. Thank you. Our next question comes from the line of Shane Solly from Harbour Asset Management. Please go ahead. Yeah. Good morning, guys, and thanks. Well, well done to the wider Arvida team for doing a great job through the year. Two quick questions from me, if I may. First one, just can you talk about inventory and how you're thinking about inventory levels and pricing and sales times and any observations you could add there? Yeah. Inventory levels are low. We pretty much cleaned the cupboard out at the end of March. I think going into year-end, we were just under 2% of resale stock and just under 2% of new sale stock that was not contracted. Pretty low levels. In terms of pricing, there it will be a bit of a wait and see approach to see what comes over the next six months. Obviously, the Reserve Bank's pretty aggressive at the moment in terms of OCR. We will keep a watching brief on what happens there. For our portfolio, we've had no pressure on pricing. We have had, and I'm talking less than five people that have had to push out settlement by another month to try and sell their houses. Generally we've got good levels of wait lists at our sites, which means we've got backup people if they can't come through. At this stage, you know, there's nothing that is gonna get us alarmed, but it is very much a watching brief. As we've talked about, Mark highlighted the chart that we've included in the pack for the first time, just around that sort of level of buffer between our pricing and local markets. Thanks, Jeremy. Now, there's a good healthy buffer too, by the way. The second one, just to expand on the confidence to accelerate development, is that just a natural progression to the business or is something else you'd add just to provide a bit of color on that stepping up? Yeah. You know, we have been very successful in the developments that we have completed to date. That was sort of proven just with that new sales chart, which is, you know, way higher than we've ever done in the past. We had some, you know, very, very successful developments. I know, Shane, you've been to Copper Crest in Tauranga. That was the first time we've ever had a community that has settled more than 100 sales within the 12-month period. The combination of a great new product there, the care suite sold really, really strongly. The new apartments sold strongly, and we also then created that transition from the villa product into the new building, which means the villa sales are also up at that site. I guess we've got confidence that we're building the right type of product. We've got the right capability within our sales team to actually execute on the sell down of the stock. Yeah, look, we are pretty confident to move forward with a continuation of the construction activity and increase that build rate as well. Thanks, Jeremy. Thanks, guys. Appreciate your time. Our next question comes from the line of Nick Mar from Macquarie. Please go ahead. Hey, guys. Sorry, most of my questions have been covered off. Just one on the outlook statement around the dividend being sustainable for FY 2023. Is there much to sort of read into that regarding where the payout ratio sort of, you know, would wash out into terms of earnings? And is that sort of a minimum number for FY 2023 in terms of the NZD 0.055? Yep. In terms of the outlook, the payout ratio in FY 2022 was impacted by the shares issued in relation to the acquisition attracting a dividend for the first half, when those shares didn't participate in the creation of earnings. We have said that we would be targeting the lower end of the band in terms of the 40%-60% band. If you weighted average the shares on issue over the year, the payout ratio would be in the mid-40s%. We are looking at a continuation of the second half dividend over FY 2022, which would be, you know, towards the lower end of that payout ratio. Sorry, just to be clear, you're saying annualize the second half 1 rather than the NZD 0.055, carry the NZD 0.055 forward? Yeah. Yeah. Yeah. Cool. That's all from me. Thank you. Thank you. Our next question comes from the line of Stephen Ridgewell from Craigs Investment Partners. Please go ahead. Yeah, good morning. Just, Jeremy Nicoll, just given the buffer Arvida's got on the resale prices compared to surrounding house prices, do you still think there's scope to increase resale prices in the year ahead, given what we're seeing in the broader housing market? Just interested in your comments directionally on where you think resale prices are going. Thank you. Yep. There's a couple of different areas. The first one would be the Arena portfolio. We will look at prices within that portfolio, particularly at the Auckland sites. As you can see on the charts there, those are largely Arena portfolio numbers in the Auckland villages only sites. There, we believe there is scope there. Around the country it will be more about individual villages, and what is going on in those local communities. We are looking at Arena pricing now, and we'll be looking around the country, in August, September, once things have settled down a bit. Sure. No, I appreciate it. It's kind of village by village. I guess to be fair, that'd probably be the case every year. I mean, I just if you could just put a even sort of high level sort of number on where you think or sort of potential upside to unit prices. Is it sort of 5% range, 10% range from here? That just even high level would be quite helpful directionally. Yeah, look, at this stage, as I said, we can see some upside on the Arena ones and it will be wait and see. No, I can't really put a number on it. Sorry, Stephen. Okay, understand. Look Jeremy, you covered off on the cost pressures in quite a lot of detail earlier. Just interested to. If you can talk to the runway, you know, you think Arvida's got to, you know, recoup those higher costs from residents, either in terms of things like the weekly fees that are charged or other copays. Just you know, how much scope do you think, given the demand you're seeing in the market for your product, you know, do you have an ability to recoup those higher costs, please? We have a fixed weekly fee for life. We do review weekly fees every year and those increase. It does take a while for that to be fully caught up. Similarly across premium charging as well in our care centers. The big area for us is the funding rates with the DHB will get us the biggest bang for buck. Okay. Maybe just on staffing, I mean, it's well-publicized the shortage the aged care industry's got at the moment. Just wondering if you could give us a sense of where Arvida sits in terms of staffing. Mm-hmm. You know, what do you need to see the government do to kinda help yourselves and the sector more broadly, you know, help solve this challenge? Yeah. In terms of staffing, the biggest area of stress would be just around clinical staff. That's mainly registered nurses. At the moment we'd probably be at just over 30 registered nurses short around the country. There are different pockets or have different shortages of different types of staff, as does every single industry in the country at the moment with the record employment levels. In terms of the government, the biggest thing they can do is bring pay parity for registered nurses into the funding results and also reset some of the immigration settings. When the government came out in mid-May with the reset immigration settings, you would've thought that healthcare professionals like registered nurses would have been on an immediate pathway to residency rather than a two year stand down period. Immigration and paying our clinical staff fairly would be the two big things for me. Yeah, that's helpful. Thanks. Maybe just one last one from me. You commented earlier, and I think in response to Andrew's question, that you think you can hold development margin around about 17%. I'm just wondering if you could dig a little bit deeper into that. I mean, obviously we're seeing, you know, or have been seeing materials cost increases and wage increases. What provides you with that comfort or that you can perhaps provide us with that comfort that you can hold margin steady year-over-year? I think it'd be fair to say most appraisers are expecting it to come off a little bit this year. Yeah. We do have some inherent increases available, especially at some of the newer sites in terms of pricing. We also have locked in, you know, things like land pricing, civil pricing, build pricing for a number of these developments that'll be coming through in the next 12 months. Okay, thank you. That's all for me. Thank you. I'm showing no further questions in the queue. At this time I'd like to turn the call back over to the CEO, Jeremy Nicoll, for closing remarks. Thanks everyone for listening in today. We're really pleased with the result, and very pleased with how the team has managed over a pretty challenging year. Again, thank you all for your support of Arvida, and look forward to carrying on this journey with you over the coming years. Thank you. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.