Standing by. Welcome to Arvida's half year 2023 results call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. I would now like to hand the call over to CEO Jeremy Nicoll. Please go ahead. Good morning, everyone, thank you for joining us on the first half call for Arvida. I'm pleased to report a very solid set of numbers for the first half of FY 2023. We saw our net profit after tax on a IFRS basis of NZD 89 million, which was up 18% on the prior corresponding period. Our key metric of underlying profit was up 46% on the prior corresponding period to NZD 38.9 million. On an EPS basis, that's up 10% to NZD 0.054 per share. Obviously, the first half of the reporting does include a contribution from the Arena Living that we bought in November last year. Operating cash flow was up to NZD 77.4 million. Importantly, our gearing remained towards the lower end of our target range at 28%. Their outstated range is between 20%-35%, so very conservatively geared going into the next calendar year. Subsequent to the end of the reporting period, we did receive a further NZD 24 million from the sale of a piece of residual land from Waikanae Beach. We settled Waikanae Beach early in the half, and then sold the rump off and received that money post-balance date. During the period, we did refinance our banking syndicate, added NZD 50 million worth of limits, and also extended the maturities of those. Very pleased that ANZ and BNZ are very supportive of Arvida and its activities. The real highlight came through from the sales activities, with the total value of our sales up 31%, to NZD 168 million. This included NZD 28 million worth of gains from resales, at a higher margin of 30%. Development gains also increased up to just under NZD 15 million at a higher margin of 20%. We did have some impacts through COVID over the period. Obviously at the start of the period, was sort of a peak of the Omicron pandemic. During that period, we did restrict admissions to our care facility, and we also incurred higher operating costs through that period. As a result, the care occupancy for the half was at 88%. That has rebounded to 90% in September and has continued to improve to now being at 92%. We've seen the value of our assets increase to NZD 3.6 billion. That's on the back of the development activity going on through the portfolio and also the increase in the valuation of our investment properties of NZD 89 million. NTA per share increased to NZD 1.93, and the embedded value per share increased to NZD 1.53. Based on current trading, we're trading at about NZD 1.30 as of now. Still a significant discount to both of those two metrics. On our construction business, we delivered 51 new units during the half, and we're on target to deliver another 219 in the second half. I'll talk about those in a bit more detail coming through. We did add one further greenfield site to the portfolio in Lincoln in Greater Christchurch. We have two further sites under conditional contract. On the following page, you can see the increase in our key metrics around revenue up 16%, Underlying Profit up 46%, and that operating cash flow up 12% to NZD 77 million. In terms of strategy, the most important thing is our people. That's both our resident community and also our team members. It's been a pretty challenging period that we've been dealing with over the last six months. At this stage, I'd just like to thank all of our team members for the huge amount of effort and work that they've put in over the period and also to our resident body for helping us work our way through that pandemic earlier in the year. Moving on to some of the development activity. There's a lovely shot of Te Puna Waiora in Kerikeri. You can see the progress there that we're making with that development. During the period, we delivered nine villas up there with an average value of NZD 920,000. Recently we've been hitting new highs in terms of sales pricing on the next stage of villas that are under construction up there. We saw a pretty solid level of pricing in place, particularly at some of the premium sites. Places like Te Puna Waiora and Waimea Plains, which are our first two greenfield developments, are selling down extremely well. In the second half of the year, we will deliver 219 units, and two of those projects are gonna complete right at the end of the financial year. That's Lauriston Park, which has 63 care suites, and Aria Bay, which has 57 independent apartments. New inventory levels were less than 2%, and that also includes our care suites that we delivered at Rhodes on Cashmere during the period. With the sort of economic outlook for the next year set to weaken, we have retained our build rate target for FY 2024 at 250-plus units. Our development mix does allow us to flex on villa builds if demand slows. At this stage, we are seeing record levels of demand. On the next couple of pages, you can see some of the projects we have completed during the period and also on page 8, some of the developments in progress. As you can see, Aria Bay is well progressed, as is Lauriston Park. Peninsula Club, new apartments will be finished in this quarter. The final stages of villas at Bethlehem Shores continue that pace with a great level of demand. The care suites and apartments building at Queenstown is now coming out of the ground, and you can see the picture there on slide 8. In terms of our greenfield developments, we've outlined the 5 different greenfield communities that we have with the units still to be delivered, shown in the tables. As I mentioned, we have added the Lincoln site. That's an 11-hectare site, and the aim there is to deliver 200 villas and 50 care suites. On page 10 is a beautiful picture of a green paddock, which is Lincoln. It is well located within a new subdivision at site, and the vendor has an ongoing rezoning obligation over the next 12 months. In terms of our overall development pipeline, the pipeline's increased to just over 2,100 units, which gives us plenty of scope. Pleasingly, you can see now that that greenfield component of the pipeline is roughly half of our overall pipeline as we start closing out some of our brownfield development opportunities that we've had within the portfolio. At this point, I'll just hand over to Mark Wells, our Chief Financial Officer, to run through the financial section. Good morning, everybody. Net profit for the period was NZD 89.2 million, with the key driver being the fair value increase of NZD 89 million, an increase of 29%. Revenue grew 16% with the contribution of the Arena Living. The additional operations increased operating expenses to NZD 104 million, with higher COVID and employee costs included in the period. Care revenue was at NZD 58 million on lower care occupancy and divestments. In the previous year. Occupancy is improving and the 5.5% funding increase applied from September 20, 2022. Village revenue increased, reflecting the Arena and also the increased development. Onto the ORA resales. Resales were at 164 units, up a pleasing 23% on the previous period. There were NZD 28.3 million resale gains with increased margins of 30% on the back of a pricing increase of 6%. Over the page shows another strong increase in the embedded value to NZD 1.1 billion, representing NZD 1.53 per share. This is on the back of increased pricing. On the lower right-hand side, the affordability graph shows a buffer still in place between house prices and our unit pricing. The new unit ORA sales. The period was strong with new unit sales gains up to NZD 14.9 million on a margin of 20%. The underlying profit increased to NZD 38.9 million for the period, up 46% on first half 2021, with Arena Living contributing NZD 16 million. Annuity EBITDA increased 52% to NZD 34 million. In terms of the balance sheet, total assets are now at NZD 3.6 billion, with strong development pushing up the investment property to NZD 3.3 billion. Onto the capital structure. Drawing debt is at NZD 555 million on increased development completions in the second half. In the period, refinance was completed to extend tenures, an additional NZD 50 million added limit to the facility. The gearing was at 28% and the loan-to-value ratio 31%, being low for the sector. Interest cover was 2.3 times on our general facility. That includes all the interest. We are in discussions with our banks to remove one technicality in the calculation, and if applied retrospectively, the calculation would be at 3.1 times. Cash flows. On operating cash flows, this was up NZD 77 million, an increase of 12% on increased operations. Strategy and outlook, I'll just pass back to Jeremy Nicoll to continue. On the aging population slide, there is a huge amount of inherent growth within the sector over the next 20, 40 years. What we're seeing at the moment is very, very strong levels of demand for our product, and this was reflected in our ability to increase the sales prices over the six-month period. When you look at all the resales that we completed in the six months, on average, the pricing that we achieved was 6% higher than the independent value as assessed at March 31, 2022. We've also been able to increase the prices of the ex-Arena villages by just over 10% since acquisition, which has created increases in both the investment value but also our resale gain line. Our strategy and our direction remains the same. We do want to continue to transform the aging experience for older New Zealanders. We have an aim to reach 50 retirement communities of scale that still offer a continuum of care. One of the key things that we have been working on is how we engage with our people in making Arvida the best place to work in the sector. We've also been very focused on how our residents in our communities are treated and how they're feeling. We're just launching our annual resident survey at the moment. We'll be able to publish the results of that satisfaction outcome early in the new year. On the sustainability perspective, we are heading well ahead of the curve. Recently, Standard & Poor's rated us in the top quarter globally for our sustainability initiatives. Toitū recently completed the audit of our FY 2022 emissions. On an intensity basis, we are moving well towards our target of reducing them by 20% up to FY 2025. In terms of the outlook, you know, there has been a number of issues that the team have been facing in the first half and some of those issues will continue as we move into the calendar year of 2023. To reflect that, we will retain our annual build rate target at 250+ instead of moving it up to 300 as previously indicated. We have the lowest gearing in the sector, and we have a continued preference for villa-led, broad acre developments. On the care side of our business, government funding for care continues to lag the costs to deliver it. We were very pleased that the government made an announcement yesterday that it intends to fund pay parity for nurses in aged care, the details of which are yet to be agreed and finalized. That work will be led by the NZACA, our sector body, with Te Whatu Ora and the Ministry of Health early in the new year. The government indicated they'll provide NZD 40 million of additional funding through to June 30, 2023, from July 1, 2023 onwards, there was a commitment for a further NZD 200 million worth of funding for nurses. Look, this is a great start, it does not completely solve the cost of care delivery. It deals with one aspect, which is nurse pay parity with the public system. There'll be continued work from the sector on restoring profitability to enable continued investment into the sector. There have been some changes to immigration policies that have started to address some of the resourcing gaps. Our view has been very, very clear in that nurses should have an immediate pathway to residency in New Zealand, and the current immigration settings are hampering nurses coming into the country. We are still committed to the continuum of care, based on the current profitability of care. The development at this stage in the future will be all through Care Suite products, either new or retrofitted where we can. We do wanna keep working with the government, as I talked about before, about care funding to enable continued investment into the sector to help all New Zealanders when they reach older years so that they can all get the care that they deserve. In terms of the 1H dividend, we've retained the dividend at the same level as the prior half at NZD 0.025 per share. There's no imputation credits or supplementary dividends payable to non-residents. We have suspended the Dividend Reinvestment Plan for this dividend payment, given the discount to value that we are trading at, and we will actively review this again at the final result. At that point, I'll pause, and we'll hand over for questions. As a reminder, to ask a question, you will need to press star one one on your telephone. That's star one one on your telephone to ask a question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Bianca Fledderus of UBS. Please go ahead. Good morning, Mark and Jeremy. Firstly, I was just wondering what the reason is you suspended the DRP for this dividend payment? The reason for the suspension is just the level of the share price compared to asset backing. It was a hotly discussed topic on the agenda for the board. On ballot, the board decided that given where the stock price was trading, that the Dividend Reinvestment Plan would be suspended. Okay. All right, thank you. Just on your balance sheet. Gearing ratio, I guess, looks fine at 28%. Your interest cover does look quite tight. Appreciate you mentioned before that you are talking to the bank about this. How confident are you that this calculation will change? If not, will that limit your developments going forward? Yeah, look, we're very confident. I probably can't say much more than that. Yeah, very confident that it will be resolved. Okay. With regards to your deliveries, for the second half being 219 units- Yep. You are confident as well that you can achieve that? Of the 219 is 120 at two major projects, Lauriston and Aria Bay. Lauriston is really well progressed. That will probably be completed in February, start of March. Aria Bay is progressing really well, so that will be complete towards the end of March. Okay. Okay, thank you. Then just with regards to the current environment, are you doing any sort of promotions, like no fees for a year or anything like that, just to try and attract new residents to your villages? Do you have to do stuff like that, or is it still just solid demand without you having to pull those levers? At the moment, there is significant levels of demand. We're not running any above-the-line promotions at any site. The demand is there. They just need to work through the house sale process and in some cases the people's houses are taking a little bit longer to settle. We'll give them a bit more of a grace period to get through that. In our balance sheet, we disclose the level of Resident loans, and you can see that's by about NZD 2 million over the six months. Yeah. Okay, great. Thanks for that. That's all from me. Thanks, Bianca. Thank you. Our next question comes from the line of Andrew Steele of Jarden. Please go ahead. Good morning, Jeremy and Mark. Just the first one for me is on the current, I guess, momentum in the business. You know, how have things changed, if at all, since the trading update at the beginning of October? Is the cost run rate consistent, and is your sales outlook consistent with that update? Sales momentum is still really, really strong. Probably September was our best month of the year in terms of sales settlements, and that momentum continues into the trading that we've seen in October and November. In terms of the care side of the business, you know, we've described the occupancy, which is the key factor. Revenue's increasing. As Mark pointed out, the 5.5 increase in care fees was only effective from September 1, so we'll see the benefit of that number coming through. As you recall, the government thought it would be good to offer us 3% increase in our fees from July 1, and as we disagreed with that, they only paid us a portion of it for the July 1st and August. Only a small amount of the increase within the, in the first half numbers. You'll see that increase starting to come through in the second half, as with previous outbreaks, we have paid our people more to work through those outbreaks. That really impacted sort of April, May, June, and things are starting to normalize on the, on the rostered hours and employment cost basis. Great. Thanks, Jeremy. Just following on from your comments on sales momentum, could you talk to, you know, how margins have been progressing as well, post balance date and the start of the second half for both new sale margin and resale margin versus 1H? Yeah. Just consistent with first half, really. Yeah. Great. Thank you. And whilst I appreciate, you know, the details are yet to be ironed out on the nurse pay parity settlement, I assume you've done some sort of rough workings on it. You know, do you have a rough sense as to the potential uplift you might get, from it? You know, do you have a sense as to what it might mean for, improved operational efficiency? Or I guess another way of putting it, reduced staff turnover as a result of pay parity. Yep. You've got the same information as I do on what the government's announced. I don't have any further information. You know, they're talking about NZD 200 million to pay 20,000 nurses, so that's NZD 10,000 a pop, assuming that they're all full-time workers. We currently employ about 250 nurses, so if it was NZD 10,000 a pop, that's NZD 2.5 million. That's kind of the rough order of magnitude. I forgot the second half of your question. Sorry. Yeah, it was Oh. On the assumption. Yeah. You know, if you don't have pay parity, you have higher staff turnover. Yeah. Assuming that this results in lower staff turnover, do you have a sense to, you know, what impact that might have in terms of improved efficiency on the business? If you look at the NZACA annual report for that was published a few months back, they had the sector turnover for registered nurses at a 48% level. That gives you an indication of the turnover that the sector's dealing with. Pay parity will go a long way towards helping that. The devil will be in the detail. We do need to keep on working with the government to iron out the details of how that's gonna work. There's more pay settlements happening with the public system. What's the implication there? There is a lot still to be worked through to sort of get a real handle on it, but it's a great first step. We've been asking and talking about it with the government for a number of years now. It's great that they've finally drawn a line in the sand. We still need to work through the detail. Thanks, Jeremy. And just a last one for me is on how you're thinking about acquisitions at the moment. Given where your share price is relative to NTA, you know, how are you thinking about, you know, the prospects for potential M&A and, you know, assuming that, you know, that's gonna be somewhat difficult if you were to do a larger transaction? You know, what's the necessary run rate of greenfield land acquisitions that you need per annum to meet current sort of medium-term development guidance? Yeah. We, yeah, obviously M&A activity at the moment is particularly constrained given where our share price is. You know, we've been trading at a 30%-40% discount to valuation. You know, buying a big asset or a group of assets and shaving 30%-40% off the value of them on day one isn't particularly appealing for anybody. As you've seen, we've not bought anything since November last year, when the share price was in excess of NZD 2. You know, there's been a number of, been a couple of public, announced portfolios that were up for sale. You know, obviously we wouldn't be able to complete those. There's been a number of single assets that come across our desk, and again, there's not really much point spending much time on them at that point. We have really pivoted towards the greenfield land strategy. You know, never say never on village acquisitions, but at this point in time, it's not on the radar. We'd be looking to continue with what we have been doing in the last little while of trying to look at about two different sites or three sites per annum for greenfield land. That's great. That's all from me. Thanks, guys. Thank you. Our next question comes from the line of Nick Marr of Macquarie. Your question please. Hey, guys. Just following on the nurse question. Where is your pay relative to the DHB rates? Do you have any thoughts on the, that comment from one of the articles about how those already paying, DHB rates wouldn't be eligible for funding? Yeah, I can't disclose, our nurse rates. The comment is one of the details that needs to be worked through. My expectation is that there will be an increase to the current funding rates per level of care, to reflect pay parity for nurses, and there'll be some sort of similar mechanism that they've used for, caregivers where there's different, grades and minimum rates payable to those, different grades. That's my understanding of how it will pan out. In the next situation, those DHB rates would be applied consistently across the country. Okay. I guess just asking maybe a slightly different way. If you did get the two and a half mil you estimated before, how much do you think you can hold on to versus having to pass through? Oh, I can't talk about that on this call. Okay. No, that's fine. Then just for kind of clarity, in terms of the outlook commentary, and it's been a little bit confusing from, you know, the initial guidance to the update to now, when you talk about the sort of dividends being consistent, are you now at NZD 0.055 or was it still the NZD 0.06, i.e. annualizing the second half 2022 number, which was the original outlook? From what I understand, the number that you used at the investor update a month or so ago. Yeah. If you're looking at it, you know, think about the base case being the same as FY 2022, so that's five and a half cents per share. We wanna be targeting at the midpoint or maybe slightly below it. You know, if we can, we'll look to increase that second half dividend as well. You know, there's a lot to play out in the second half before we provide anything more definitive than just looking at the same level as last year. Yeah. Is it correct that essentially at the sort of investor update, it was NZD 0.06 at the midpoint, which was sort of NZD 0.12 of earnings, and now it would be NZD 0.055, somewhere around that 50%, which could be sort of in the NZD 0.11-NZD 0.115 range. Is that a fair way of thinking about it now? Yeah. The fair way to think about it is the same as last year, and if things go well, there may be some upside on the dividend. No, that's good. All right. That's all for me. Thank you. Our next question comes from the line of Aaron Ibbotson of Forsyth Barr. Your question please. Thank you. Good morning, Jeremy and Mark. Just a couple of quick ones for me, as you've touched on most of it. Firstly, I'm just curious to hear your thoughts around what I thought was a sensible reduction in build rate ambitions for at least FY 2024. I guess my question is more broadly, in light of how the market is pricing, you know, your stock, the movements in debt and interest rates markets? You know, how do you think about this 25%-35% gearing target? Is there a case to be made that it could be a little bit lower? Is that how we should interpret your sort of slightly re-reduction in build rates? More generally, how are you thinking about capital allocation when it comes to, you know, new builds versus either paying down debt or even buying back some shares at these levels? Yep. We have made that decision just to keep the build rate at the same level of 250+. We do wanna be able to have a good mix of what we're building between builders, which are a little bit quicker to recycle the cash in care or apartment buildings, which may take a bit longer. You know, we are cognizant that, you know, no one knows what the economic environment in the next calendar year is gonna be. We're very pleased to be going into that period with the lowest gearing in the sector. 28% is a good starting point for us. We do wanna keep building through the cycle. We do see that, as talked about earlier on, there is strong levels of demand. You know, we are more of a growth stock than a, you know, a dividend reliant stock. For us, you know, continuing to invest in our business makes sense. Obviously we have talked about share buybacks as an organization and decided that at this point in time, we'd rather keep our gearing rates at a lower level to enable us to continue to build through the cycle. But yeah, capital management is a key focus for us as you see with those rising interest rates. Thank you. Apologies to come back to the question around sort of what I guess, is a convoluted earnings guidance through. Yeah. Dividend payout ratio. Sure. I didn't pick up any change in language from this slide 26 versus your update from September. Is there a change? 'Cause I read it as being the same message as you gave in September. Yeah. Your answer to the previous question suggested to me that there had been a slight down adjustment. It's just the interpretation. Effectively, what the slide says is the dividend for this payout for the full year is likely to be towards the midpoint of the payout range. That's, you know, in plain language, the midpoint's 50, and it's gonna be towards that, which means it'll be, you know, hopefully in the 40s, but at the high side of the 40s, and that we are looking at the base case to retain the full year dividend at the same level as FY 2022. That's NZD 0.055 per share. Okay. That is sort of what you said in the September update. I guess- Yeah. For some reason we interpreted that as being NZD 0.06 or the message around it was more the 2 times three than NZD 0.055. Okay. Yeah. That is then clear. Thank you very much. Maybe I'll just gonna throw it out there, a question on sort of general OpEx and inflationary wage pressures. You know, what are you experiencing at the moment around wages if we ignore nurses for now and other costs? Should we expect, you know, the sort of continued sort of mid-single digit OpEx growth half and half, or is it tapering off a little bit? Okay. Hey. Hey, Aaron. Yeah, I'd expect similar rates at this stage. It's certainly, in terms of general costs, they are being passed through to everybody. And you're right, there is still pressure in those employee type areas, as we know. So I'd say it's carrying on, at least through to the end of this year and probably through to March 31 by the looks of things. Okay. Thank you. That was it for me. Thank you. Again, to ask a question, please press star 11 on your telephone. Again, that's star 11 on your telephone to ask a question. Our next question comes from the line of Shane Solly of Harbour Asset. Your question please. Good morning, guys, and thanks for the briefing. Firstly, congrats on navigating another very tough half, and to your team doing a great job. Also to acknowledge you're leading the charge and making people aware of this funding issue that's in gear. My question, just in terms of settlement, questions, in terms of delays, and you had a great chart on the 16 of affordability. Can you talk about whether you are seeing much of a gap between the sales and the sales process or blowing out and what you might do to address that? Well, it's definitely been a half of two halves. Casting back to the first quarter, there were, you know, that was in the middle of the pandemic, and there was a bit more uncertainty about where house prices were or were going and where interest rates were going. We did have a lower level of settlements than we expected in that first quarter. In the second quarter, things just ramped back up to where they should be, and even exceeded where we thought. It definitely did change sort of midway through the first half, and we're now at the point where most people know where the house prices are, most people know where interest rates are. There's been some ironing out on the lending rules. We are much more in a period of equilibrium. We, you know... We're not really seeing a lot of issues, but, you know, some people are having trouble selling their house. There's no doubt about that. That's something that we just work through with the resident, and we've just got to be on top of it. We need to know where the person's house is, what the value is, who's doing the sale for it, what is the process, what are the timelines, and just working with the prospective residents to help them navigate that, so we can get the right outcome. You know, we also need to be cognizant that if someone's not gonna complete, we need to move on to someone else because there is enough demand for us to sell the product. We just gotta make sure that we're working with our, with our prospects and our databases, and that we're trying to get the right result for everyone. Great. Thank you, Jeremy. I really appreciate it. Thank you. Thanks for your comment at the start too, Shane. It has been a very, very tough period for the team, and they've done an awesome job, through this period. Thank you. At this time, I'd like to turn the call back over to Jeremy Nicoll for any closing remarks. Sir? Thank you very much for your time on the call today. I think Arvida's in a very, very strong position as we move into the second half for a period of improved performance over what was a very good first half to the year. Thank you to everyone on the call for your support of Arvida. It is really appreciated and hope if I don't see you before Christmas, you will have a great holiday. I think everyone deserves it after this year. Thank you.