Good day, and thank you for standing by. Welcome to the Arvida Group Full Year Results Conference Call. I would now like to hand the conference over to your speaker today, CEO, Jeremy Nicoll. Please go ahead. Good morning, everybody and thanks for joining us today to have a run-through of Arvida's annual results for the year ending 31 March, 2023. I'll just work our way through the pack, and I'll cover the front section, and then I'll hand over to Mark Wells, our CFO, to run through some of the financial section with you. In terms of the overall highlights for the year, we saw underlying profit up 20% to NZD 88 million, and a strong increase in our annuity, EBITDA, up to NZD 84 million. Our net profit after tax was less than the prior year, down about 59% to NZD 83 million, largely on a lower level of increases in the value of our investment properties. We also had some recognition to include with the impairment for the flood damage at Park Lane. In terms of our overall operating cash flows, we saw that in line with last year at NZD 153 million, as well as seeing our asset value increase to NZD 3.8 billion, with NZD 3.4 billion of that within our investment property portfolio, and our care facilities valued at just under NZD 200 million. In terms of gearing, we're in the midpoint of our 25%-35% range, and the board has declared a final dividend of NZD 0.0235, which is at 40%, which is the lower band of the range applicable for the FY23 year. The board has amended the payout range for FY24 to be 30%-50%, and with guidance at the lower end of that range. With regard to the final dividend, the DRP is back on with a 2% discount. We really saw a very strong year from our retirement village side of the business, with record levels of sales coming through. We've seen very, very strong demand for our retirement village living product, and that has flowed through into the sales results that we've achieved during the year. Now, Mark will give you a bit of a run through of those a bit later on. In terms of our delivery, we did have a target of 250+ for the year, which we missed, with the actual outcome being 215 units delivered. As we flagged in our latest newsletter in early April, the Aria Bay project in Browns Bay has been delayed, mainly due to weather conditions. That building is now scheduled for completion within the second quarter of FY24. We also delivered right at the end of March, the new care suite building in Cambridge at our village called Lauriston Park. We've got 63 care suites there, and that includes 15 for residents living with dementia. It is actually a beautiful piece of architecture and a beautiful delivered building, which was delivered by our internal construction team. The operationalization of that building has gone extremely well, and whilst we do have the official ceremony to open it later on next week, we've got our first lot of residents moving into the facility from today. Looking forward to next year, we are retaining the target delivery rate at about the same level as FY23, so around that 200 unit mark. In terms of our teams, we have had a big focus on our employee proposition, which has got a 2-3-year timeframe to roll out fully. We're already seeing really good results coming through with our survey tool, which is Peakon, with engagement going up from 7.2- 7.5 against a global peer average of 7.8. We are getting a lot of valuable feedback from our team members through that survey process, so it has worked particularly well. We are still continuing to invest heavily in supporting our teams with development, with over 45,000 courses completed during the year, as well as facilitating mental health and mental well-being workshops across the network. Our residents have been impacted by COVID over the last few years. At the start of the year, obviously, we were in the midst of an Omicron outbreak, which was affecting our residents, particularly within our care centers and also particularly our care staff as well. The team has done a wonderful job in managing through the pandemic, and hopefully, we're now sort of out the other side of it. We've really recorded excellent NPS scores again from our residents. We saw a slight drop in the independent residence NPS to +38, but we saw a massive lift in our care residence NPS to +59, which really represents the level of care that they were provided through the pandemic. As well as those NPS scores, we're rated number one by Canstar for most satisfied customers within our sector. There are some headwinds coming this way with pending reviews from the Commerce Commission and the Ministry of Housing and Urban Development. We'll be working through those in due course. We've also worked very hard on our sustainability framework, and you'll see that included in detail within our annual report, and later on in the presentation as well. We are well advanced to meeting the XRB's climate disclosures. We have gone through a full emissions calculation, and that will be published on our website. That also includes calculations across Scope 3 emissions. And our reporting, inventory reporting, was assured by Ernst & Young. In terms of how we've governed our business, we have supported our teams through the COVID period. We are increasing our focus, as I talked about before, on our people, and developing plans that meet with Ngā Pae o te Māramatanga in terms of Māori health outcomes and also for Pasifika people. We have had a strong focus on capital management, and that's in preparation for what could be a softer economic period and property outlook over the coming period. The board are also conscious of the tenures of the directors, with four of our five directors being appointed at or around IPO, which is about 8.5 years ago now. Coming up to a 10-year period. The board is actively looking at a board refresh process. For us, the strategy is about building a platform for sustainable growth and driving the growth and the cash flows and returns through the businesses that we have. How we're gonna do that is by focusing on our capital, making sure we're disciplined with the allocation of that. We need to mature our business in several areas and have that strong cash focus. You know, it has been a tough period to work through over the last 12 months. We're in a very strong position as we move forward into FY24. In terms of our development program, as I said, we delivered 215 units, and you can see the splits on page 10 between first half and second half. The delivery was largely skewed towards villa product, as well as the 63 care suites at Lauriston Park. A lot of the deliveries in the second half were weighted towards the end of the year, and that saw our uncontracted new unit inventory at 4.4%, or if you took out Lauriston, it would be at 2.2%. We are still seeing strong demand for our premium products, and we're also seeing some cost increases coming through in the construction area, but those are starting to moderate. Over the next couple of pages, you can see some of the pictures of the product that's been delivered during the period, including on page 12, the Lauriston Park Care Center. If you are ever in Cambridge and want to come have a look, please feel free to let me know. On page 13, we've got a snapshot there of the Aria Bay development. On the left-hand side of the photo is the care suite building that's been in operation for a couple of years, and on the right to upper, are the two new towers going in there with the 57 apartments that are due for completion in the second quarter. Apart from Aria Bay, the rest of the product to be delivered in FY24 is all villa stock, and you've got some indications on that slide of what villages they are at. We also have a couple of larger projects in play. On page 15, on the right-hand side, Queenstown Country Club, care and apartments is the most advanced. That's due for delivery in FY25, and a similar building at Bethlehem Shores, care suites and apartments is obviously in very early stages. These are both... These are our two premium villages, we're very well supported through the addition of care suites and some apartment living. On page 16, some details on our greenfield development opportunities, the picture there shows the 55 hectare super lot that we acquired on the northern edges of Warkworth. As you can see, the new roundabout heading towards Matakana is at the bottom right of the photo, just above the end of our boundary on the top is the Warkworth Golf Course. Very well located. Obviously, we don't need 55 hectares to build a retirement village. It did come as a super lot, once we've gone through the master planning, we'll be looking to divest the balance of the surplus land at Warkworth. Within the pack, we've also provided some information on some project returns from a couple of our brownfield development sites, Copper Crest and Queenstown Country Club. Copper Crest is a good example where we acquired a partially built village in 2016. We spent considerable amount of CapEx on completing the villas and also building a care suite center there. As you can see through acquisition, the CapEx incurred an offset by the new sales of units. There was a total of NZD 11 million invested in Copper Crest, and that is represented today by a current valuation of that village of NZD 94 million. So there's an uplift there of NZD 83 million. On the following page, we've also provided an example of our first greenfield development, which is Waimea Plains. Obviously, we're halfway through this project. As again, you can see, we acquired the land for just over $10 million. To date, we've spent $24 million and received in proceeds of $80 million. We do have some stock that we've just finished in March of 2017. The total, assuming that stock is sold, would be $7 million invested, and that's represented by a net total of work in progress on future stages, the current valuation of the village at $34 million, and also the balance of the undeveloped land at $6 million. I'll now pass over to Mark Wells to run through the financials. Good morning, everybody. Net profit for the period was NZD 82.5 million on the back of revenue growth of 10% to NZD 222 million. Village fees and DMF increased, reflecting the 12 months of the Arena villages in the group and new units delivered. The additional operations increased expenses to NZD 212 million, along with higher employee and property costs. Fair value was at NZD 81 million, and that with valuations reflecting lower growth rates and flood-related impairments at Park Lane. Care revenue was NZD 119 million, with lower average occupancy, especially following the Omicron outbreak, but this improved back to 94% at year-end. Village revenue increased strongly to NZD 93 million, reflecting Arena and the new units delivered. Over the page, LRA resales of 371 units on gross proceeds of NZD 220 million, up 29%. The strong second half of sales led to resale gains of NZD 69 million, with the average margin increasing up to 32%. The next page highlights the embedded value at NZD 1.1 billion, and that reflects an average per unit of NZD 314,000 of future cash flows released on resales. The embedded value represents NZD 1.56 per share, that's up 15% from FY 2022. The strong new sales on villas, with the average RA value up 25% to NZD 794,000. Total new sales for the period at gains of NZD 27.8 million, at a margin of 18%. On the next page, the underlying profit shows an increase of 20% to NZD 88 million, driven by strong second half sales. The annuity EBITDA increased 30% to NZD 83.6 billion. Onto the balance sheet, total assets have increased to NZD 3.8 billion, with development deliveries pushing investment property up 12% to NZD 3.4 billion. The NTA per share on that, on the, on the net assets was NZD 1.90 per share. In terms of the capital structure, net debt sits at NZD 615 million, with gearing sitting at the mid-range target at 30%. The total facility limit has increased to NZD 800 million, with the addition of the ASB to our banking syndicate. The group cash flows, net operating cash flows are NZD 153 million. That follows a tough first half, but have improved into the second half. There were increases into the, in the deferred sales at balance date of around NZD 15 million, but a good number of those have now been received. I'll now hand back to Jeremy to continue. Thanks, Mark. On page 30, it is important to remember, the demographic changes that are coming through New Zealand over the next 50 years. The chart there illustrates, the increase in the population of older New Zealanders in that 75 years plus bracket. There is a strong demographic that continues to underpin, our addressable market and, the demand for the products that, and services that our team provide. In terms of the outlook, you know, the board and the management team have been very focused on how we manage cash, our capital commitments, and what our capacity are to fund growth in. With that, we have reduced the build rates FY24 to around 200 units. We have made some modifications through our dividend policies, and we've also been working through workforce planning across our business. The indicators for the economy are that, you know, things are beginning to settle, but there are still challenges out there. We still have shortages in registered nurses across the health sector in New Zealand. The opening up of pathways for residency, for offshore registered nurses and some of our care workforce are helpful, but there is still a large deficit in the workforce that's available in New Zealand at the current time. You know, the government did announce at the end of November 2022, that there are plans to achieve pay parity for registered nurses within the aged care sector. The, the messaging on that has now sort of somewhat diminished, with the government calling it reducing disparity for our registered nurses in the sector. We're currently in the process of negotiating the changes to the funding rates from July 2023, and look forward to seeing some results coming through that. On an overall basis, the cost to deliver aged care is higher than the increases in the funding rates that are being provided. What you will see is, there is across the sector, a continual decrease in the number of aged care beds. Traditional aged care beds are closing. And our strategy, like everyone else, is to continue with the care suite delivery program, and create a higher quality product do us well into the future. We still have a real strong focus through the NZACA, on ensuring that we do get right levels of funding across the sector, to ensure that traditional aged care beds are available as the changing demographic comes. I'd like to thank my team for the work this year, and also for our investors for continuing to support us through a challenging period. You know, as we go forward, our priorities are around being disciplined with our capital, maturing our business in key areas, and focusing on that cash component. On slide 32, we've highlighted the focus areas and the key KPIs to go with it. In terms of dividend, I've talked about that at the start of the period. At this point, we will pass it back to Michelle, and she'll facilitate questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question comes from the line of Aaron Ibbotson with Forsyth Barr. Your line is open. Please go ahead. Yes. Hi there. Good morning, and thank you for that. First of all, if it's okay, I'd like to just ask you to. Maybe you can walk us through, in a little bit more detail, your new and very commendable disclosure when it comes to cash recovery on, in particular, page 18, the greenfield development. My question is basically, if I look at your sort of NZD 80 million or so of projected future cash flows and what you're expecting to deliver with that, I get to call it an all-in cash recovery of, say, 80% or so. My first question is: Is that roughly right? Secondly, you know, is this sort of what you are expecting from future Greenfields, or, you know, are you expecting it to be better or worse? You commented on some increased CapEx or costs to build costs. Thank you. Yes, you are about right there, Aaron. The future delivery at Waimea Plains includes the build-out of the villas of about 35. We have a care suite building going in there with about 59, and attached to the care suite will be some additional resident amenities. We are looking around that, you know, NZD 70 million mark for the spend, and we'll recover probably a bit more than you said, about 85% of that. In terms of future builds, we are having a period where construction costs are up, and residential house prices are down. It is a period in the cycle. We are seeing some changes happening in the construction market at the moment with future forward orders of work drying up. Obviously, that first hits those in fields like the excavation specialists. We are seeing that happening, so we are expecting that some of those construction prices will start to fall away as people look to get work. Thank you. Second question, just on the insurance payments. Did I get it right that you included roughly NZD five million or so of that in your underlying earnings? I was just hoping if you could get some clarity around this, I think you wrote business disruption or something like that. You know, more specifically, are these additional costs incurred that's been included in OpEx? Is it, you know, lost care revenues? Is it lost new or resales? Can you sort of attribute those NZD five million slightly more specifically, if that's okay? And you're correct, Aaron, it's around the NZD 5 million mark. It does relate to business interruption insurance, not the material damage to the separate component, which you can see there's a provision in the P&L for that, the balance sheet for that. The NZD 5 million, majority of that relates to lost sales and forced buybacks. Roughly, you could say that cash flow-wise, we'd be neutral on that aspect with those payments received for that business interruption insurance. There were other business interruption costs we did incur. There'll be an amount of around half a million or something like that in our P&L. Thank you. One more on costs. I'll be quick. You called out NZD 4.2 million, I think, of COVID-related costs. How should we think about them going forward? Is this a pure non-repeat, or is this more of a sort of shrinking a little bit in FY24? Yeah, we'd like to think it's shrinking. There are still challenges out there. We are still getting COVID outbreaks, that we still need to look at, but that is certainly reducing. We're hoping that those costs, can be, can be worked through and will reduce in the future. Thank you. Final question, just on cash flow in FY24. I appreciate this is not a guided number, you know, it was quite substantially negative this year, this reported year. I assume that you've got a little bit left to spend on Aria Bay, it's primarily villas. I was just hoping that you can give some sort of indication of maybe where you see CapEx, and if you so wish, how you see the overall debt levels move in FY24, particularly given what the board has asked you to prioritize? Thank you. Yep. Yeah, the board's asked us to ensure that we stay within the bounds of our target ranges. We do wanna be able to match our development spend with our capacity limits. As I described earlier on, yeah, Aria Bay's pretty much done. We are in the final throes of that. The balance of the stock to be delivered in FY24 is villas. Also talk briefly about the two larger projects at Queenstown and Bethlehem Shores. We haven't provided any guidance on CapEx numbers at this point, but included within our debt or offsetting our debt, of NZD 600 odd million, we do have about NZD 500 million of development-related items, development land, work in progress, and completed stock. Sorry, Jeremy, if I can probe just a little bit more. I mean, when you bought the Arena villages, when you made your acquisition, there was clearly a lot of embedded value that you are now sort of harvesting. you know, my assumption certainly was that, you know, That harvesting process or period of harvesting, with these fantastic resale margins, you're bringing in. Mm-hmm. stabilize cash flow for the group as a whole. Yeah. I appreciate this year. Yep has been a bit different, but if I now look for twenty-four- Yep 2025 with the reduced build rates, you know, am I wrong to assume that you should be able to deliver some sort of cash flow neutrality? I appreciate you've got a, whatever it was, NZD 200 million debt headroom, are you planning to use that debt headroom? Definitely not planning to use it all, no. Look, there will be ebbs and flows as with construction and sales. We do expect the debt will increase slightly, but we do wanna keep it relatively close to that midpoint. Okay. Thank you. That's it. Thank you. One moment. Our next question. Hello comes from the line of Eric Decker with Jarden. Your line is open. Please go ahead. Oh, yeah. Thanks for the presentation, guys. Just, I think on the land, you've got two pieces you've noted under contract. Mm-hmm. Is it safe to assume that they're sort of each broadly in the NZD 10 million-NZD 20 million range, similar to recent acquisitions? They will be similar to recent acquisitions. Both are subject to ongoing zoning processes. One's probably a couple of years away at best, and one, you know, within the next 9-15 months, I'd say. Does that also mean then that, if you do go unconditional on them, the settlement would kind of be beyond FY24, you know, sort of conditional on getting that zoning? Correct. The one that's the furthest away, I'd say, would be at least a couple of years away before settlement. The other piece, it will depend on the council processes. It might be towards the end of this financial year, or it might be early in the next. Sure. Notwithstanding anything else that you that could come up, it's just really only the Warkworth that we have to factor in, which looks like you said all just at the start of FY24. Correct. Yep. Great. You know, obviously FY25, full year 2023 had the, you're still coming through with the full year impact of acquisitions and that. What sort of the outlook for growth and operating expenses in FY24? Yeah. Obviously our key operating expense is wages. You will see from 1 April, the lift in registered nurses' wages. From 1 April, you'll also see the lift in our care support workers that are around sort of that, just over that minimum wage level. Those increases come through. Our care giver sector is subject to a pay equity claim. They are currently going through early stages of the process before the bargaining process happens, probably in a couple of months' time. Now I'm unsure about what the outcome from that pay equity claim would be, there could be some significant increases there for those workers. With that process, we're running the assumption that any increases are fully funded by a separate part of the government, which then passes it on to Te Whatu Ora to then pass on through the funding rate. Whilst you might see those sorts of increases coming through, we will be getting some compensating funding coming through the top line as well. It's a little bit hard to do in isolation, and there's more that that's kind of net thing. Sure. You know, obviously you've got, I mean, I guess the key one would be Lauriston Park, sort of upscale. Yep. You know, care suites there, sort of seeing the cost sort of increase. Are there any traditional care beds, you know, given this funding situation that you are considering decommissioning? No. Okay, great. Last one for me. Any increase to hedging post-balance date? Sorry, I just missed that. Can you please repeat that? Sorry. Yeah, there were two parts. Any increase in the hedging in place, on your debt post-balance date? Also, are there any conditions, you know, on dividend that come with the covenant waiver? No, no. No on both of those, in this, for the next period. Thank you very much. There's one more answer to that in terms of the decommissioning of care beds. We do have a plan in place for accelerating the conversion of some of those into care suites. Yep. Hopefully net will be the same or just slightly lower if we do convert 2 care beds into 1 suite. Is some of that gonna start in FY24? Yeah. Yeah. Where, whereabouts are you looking at doing that, or can't you say? I can't say at this point in time, but we've got one in mind that will be relatively straightforward to do. That will be sort of our big pilot process. Thank you very much. Thank you. Thank you. One moment. Our next question comes from the line of Nick Mar with Macquarie. Your line is open. Please go ahead. Morning, guys. Just in terms of affordability, how are you feeling about those metrics? I noticed that New Zealand's up to 96%. Are you guys seeing any pushback on pricing? Obviously your pricing is still at a premium to the March 2022 bells, which was good over there. Yeah. We do include those graphs on page 23, which just sort of show the Auckland affordability ratios and then all of New Zealand. Feeling pretty good about them actually at this stage. You know, with a combination of residential house prices dropping and our 8% increase in unit pricing over the period, that can be looking pretty good. There is a lot more detail in the appendix, which you may not have got to yet, which does show affordability ratios per village, per product type. And there you can sort of get a better gauge on an individual basis, where you see some areas with premium pricing to the local area. You know, when you think about it, and I think I've talked about this on previous calls, sometimes the affordability ratio is misleading. If you look at our Masterton village, the affordability ratio of the villa is 149%, and that's because a lot of the people who buy those villas are coming from farms or off farms and local rural areas, or moving from Wellington. The affordable service department. We've got in places like Park Lane, which is on the North Shore, or what's Aria Park, is it 45% in Epsom? Again, it is a reflection that these are lower value products in quite high-end areas. You do always have to take them with a grain of salt. I think in general, especially when you look through the detail in the appendix, I think you're looking in very good shape. Have you guys been doing any, different kind of inducements or, deals on product lately? No. Cool. Just on sales, Aria Bay, have you guys done much pre-sale of that product? Not at this point. We do have a building that we're remediating in further up the road in Browns Bay. We will transfer about 20 residents from that building into Aria Bay. We're just waiting to make sure that we've got a firm completion date before we launch into the real marketing. We do have a number of pre-sales that are conditional upon, you know, being able to give those people access in to have a look at the apartments, et cetera, obviously. The big marketing campaign will happen towards the end of the second quarter. Great. Just on those 20 transfers, how long will that be for? It's, I'd say, you know, there will be some residents that do stick around in those apartments. Then we'll have obviously replacement stock at our other village up the road, which is Mayfair. You know, we're not sure, but, you know, roughly, if you work on 50/50, potentially. Are you getting an ORA top-up for moving into the brand-new apartments if they're looking to stay? No, they're sort of like for like in terms of one-bedroom apartments going to one-bedroom apartments. Okay, that's great. Thanks a lot, guys. Thanks, Matt. Thank you, and one moment. Our next question comes from the line of Stephen Ridgewell with Craigs IP. Your line is open. Please go ahead. Good morning. Jeremy, given the funding gap and ICR you called out, in noting you've sort of responded to Ari's question, you weren't looking to close some of those, perhaps less profitable care facilities. Is there an option to, you know, divest some of the longer tail of assets, as we have seen some of your competitors signal, in recent weeks? There's definitely that option. Not last year before, we divested it was either 4 or 5, 4, some of our smaller care-heavy sites. Yeah, we have a track record of recycling that capital. Thanks. Just maybe on kind of care margins, it did seem you were seeing some green shoots, if you like, late in the FY23 year. Are you seeing, you know, perhaps that improved margin recovery kind of continuing into the early months of FY24? Yeah, I mean, the key driver at the moment is occupancy. When you get that occupancy back up, it certainly does help. What we have seen in the 1st half, or sorry, 1st quarter, is obviously, the increases in the minimum wage. They're, they're in effect from 1 April, they're, at this stage, unfunded, because the funding increases don't take account until 1 July. We've also increased the funding for our nurses, and whilst that was, the increase was funded, the unfunded piece relates around annual leave increases as their base rates increase. There are still headwinds coming through, but we are looking forward to getting through this negotiation piece with Te Whatu Ora over the next few weeks and resetting that rate coming 1 July, and that will be a big boost. Okay, thank you. Yeah, just on the capital surplus disclosure on the projects, and I'd agree with Aaron, it's very helpful. You haven't split out the direct build costs from the capitalized interest apportionment. I'm just wondering if you can give us a rough idea of how material that is? I have no idea off the top of my head, sorry. We can catch up later, and I'll have a look into it. Okay, thanks. I guess just going back to your comments on development margin, I mean, we've obviously seen a cost inflation on the build side and also cost of debt stepping up over the last 18 months. I mean, does that suggest that the development margin of 16% delivered in the second half might be a bit softer, you know, medium to medium term? You know, so, you know, would 10%-15%? Yep. margins be more reasonable? Yep, it certainly does. Yeah. Okay, that's helpful. Thanks. Then just one last one from me. You know, hear your comments on the land banking and the focus on kind of driving returns out of that land bank. I guess just in terms of the strategic kind of planning perspective, are you planning to run the land bank down over coming periods, or would you still look to, yeah, replenish, you know, at roughly the rate that you're building? I mean, obviously, you've obviously done some acquisitions recently, but is that a general plan just to keep the land bank at there or there about the levels it's been, or would you be happy at some point to run that down, or would you potentially also be looking to increase it? At the moment, obviously we've got these couple of additional bits pushing out into the future. At this stage, we're not looking to buy another piece of land tomorrow. In the same vein, sometimes you can get a great piece of dirt at a great price, and that's really reflected in that Warkworth transaction. That's a fantastic location. And we've got it at what we believe is a very good price. At this point in time, you know, we are not looking at adding any other sites that we haven't talked about today. If the right bit of dirt came along at the right price, we'd definitely take a look at it. Yeah, happy at this stage. Take into account those two conditional contracts that, if you took those into account, we would be running down that pipeline a bit. That's very helpful. Thanks, Jeremy. Thanks. Thank you. This does conclude our question and answer session. Ladies and gentlemen, this also does conclude today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day!