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Anita Addorisio: Good morning, and welcome to Lifestyle Communities investor analyst conference call. My name is Anita Addorisio, Company Secretary of Lifestyle and moderator for this call. This webinar will be recorded for the benefit of those who are unable to attend today, and the webcast will be available upon request. Please be advised our conference call will strictly be limited to 1 hour. Due to the number of attendees, we will endeavor to address as many questions as possible during this time. We encourage you to contact the company via the Investor Center available on the company's website should you have any queries following today's update. Our presenters today are our Chief Executive Officer, Henry Ruiz; and Chief Financial Officer, Angela Farbridge-Currie, who will provide an update on the FY '26 half year results as released to the market this morning. Also joining us today is Clare Lewis, Investor Relations. This will be followed by a Q&A session, for which I'll now outline the procedure as presented on your screen. [Operator Instructions] Please note that questions received function, which are of a similar nature will be grouped and answered at the appropriate time. I now invite our CEO, Henry for his presentation. Over to you, Henry.
Henry Ruiz: Thanks very much, Anita, and good morning, everyone. Thank you for joining us for our FY '26 half year results. I'm joined today by Angela Farbridge-Currie, our CFO; and Clare Lewis from Investor Relations. Moving to our purpose. Our company purpose is to reimagine a Way to Live for independent downsizers. We develop and manage architecturally designed low-maintenance homes together with resort style communities that allow downsizers to free up equity from their previous home and live the life they want. Moving to a business snapshot of our results. Our first half results are summarized at a high level on this slide and show we are strongly executing against our plan to get strong to grow stronger when the property cycle turns. The first half reflects a business that is operating with discipline and focus through a challenging market. We delivered statutory profit of $15.8 million, generated positive operating cash flow of $41.2 million and continued to materially strengthen the balance sheet, reducing net debt to $323.6 million, down from a peak of $490 million in May. Importantly, we're seeing early momentum as our refreshed Way to Live strategy embeds. New home sales improved materially, recording double-digit growth in sales with 110 new home sales and 128 new home settlements. Our annuity income stream continues to grow with 4,256 homes under management, recording $25.3 million of gross rental income, up 11.9% and customer satisfaction is trending positively. We have also enhanced our attractiveness to new prospects by introducing choice on when to pay the management fee, upfront or when they sell. And we have a healthy portfolio and pipeline of over 5,700 homes. At the same time, we have remained deliberately cautious, selling through built inventory, rightsizing the land bank, and restructuring our debt facilities to provide longer tenure and flexibility. At the 31st of December, the fair value of our investment properties was $898.1 million. While the Victorian property market remains challenged and the timing of the VCAT appeal decision is uncertain, our focus is clear: Supporting our homeowners, protecting cash flow, and positioning the business to emerge stronger as conditions normalize. With that context, I will walk you through our results before handing to Angela for the financial detail. Moving to our results snapshot. So going a little deeper on our results, you can see we have had a pleasing market response to the launch of our Way to Live brand campaign, which has landed well with new prospects and our existing homeowners. Net sales from new homes improved materially from the prior period, up 12% from the second half of FY '25, 110 versus 98; and a market improvement from this period last year, up 168%, 110 versus 41. New home settlements were lower than the first half of FY '25, 128 versus 137, driven by lower sales rates over the last 18 months and the lapse period between sales and settlement timing, as almost all of our customers need to sell their pre-existing homes before moving in. Annuity revenue from rental income continued to grow to $26.7 million, driven by new home settlements and inflation-linked rental increases. That said, the total annuity revenue was slightly down on the previous period due to the deferred management fee not being collected on contracts impacted by the VCAT decision, which remains under appeal. Following the settlement of planned land sales and ongoing inventory realization, we are pleased to report a further reduction in our net debt balance, down from $460.5 million at June 2025 to $323.6 million at December, as I just highlighted. Our operating profit after tax was $16.1 million, reflecting a period of transition as lower new home settlements from earlier sales cycles flow through. Margins were compressed as we intentionally sold through built inventory and deferred management fee revenue was impacted by the VCAT decision, alongside interest costs associated with the land bank. Closing out this half, we opened 2 new impressive club houses at our Ridgelea and St. Leonards -- The Shores communities. Moving to the property market. The Victorian property market has shown signs of improvement this half, however, still lags national trends and continues to face into some headwinds into the second half. As you can see from the figures on the right, sourced from Cotality, the value of dwellings in Melbourne increased 0.8% over the quarter and 4.8% over the December 12-month period, placing it at the lower end of capital-city growth. The pace of growth in home values lost some staying through the end of 2025 and into the early months of 2026. The slowdown aligns with the dent in consumer confidence in December as inflation tracked higher and given the RBA's posture towards monetary policy. Total listing volumes in Melbourne were down 12.6% from December 2024. And as recently as the past few weekends, option clearance rates are still in the low 60s. Moving to a business update and strategy recap. So with that property market context, as I mentioned at the opening, our company purpose is to reimagine a Way to Live for independent downsizers. It's brought to life through 3 strategic pillars. The first is to be the go-to-choice for downsizers, committed to mastering both sides of the sales process, the inquiry to appointment journey, and supporting homeowners through the process of selling their existing properties. The second pillar is to be renowned for the homeowner experience in our communities by investing prudently in high-quality amenities, digitally enhancing our communication methods, and a consistent experience that empowers homeowners and strengthens referral advocacy across our communities. We refer to our third pillar is powering our growth engine, by embedding capital discipline, market-led product and pricing strategies, refinement of our home designs to ensure product market fit with the aim of agility across cycles and sustainable financial returns. Now translating our operating pillars to value refers to how we create value for shareholders and our homeowners through 4 key operating pillars that work in tandem in a virtuous cycle. We refer to these pillars as Way to Live, Way to Grow, Way to Build, and Way to Operate, and I'll take them one by one. Way to Live refers to our focus on delivering a truly outstanding homeowner experience while doing it more efficiently with the goal of improving our operating margins to drive value to our annuity book. Way to Grow refers to the sales and marketing engine that ultimately drives the company's settlement rate. We are aiming to grow our net sales levels over the coming years as the property market strengthens. Way to Build refers to us reengineering the development process to deliver quality homes and community amenities that help enable efficient capital recycling at a sale price of 80% to 90% of the median of the catchment area with the aim of enabling the company to sustainably grow. And Way to Operate refers to our focus being market and homeowner centered and managing our corporate overheads commensurate with the longer-term growth ambitions of the business. The subsequent updates from this presentation are organized into these operating pillars. Moving to Way to Live, the homeowner experience. As part of our homeowner-centered operating philosophy, we continue to work in closer partnership with our homeowners. We use data-driven insights to inform prioritization, community action plans, and decision-making. We've introduced consistent communication frameworks and elevated our transparency. Key trends, as you can see on the right, indicate we are on the right path with strengthened trust indicators and the shift to more scalable and positive engagement from homeowners. Overall, customer satisfaction continues to improve from each 6-month survey period, improving from 75.7 as at March 2024 to 78 at September 2025. Moving to Way to Grow, the deferred management fee model for existing homeowners. In July 2025, we changed our deferred management fee to be consistent with the findings of the VCAT ruling handed down on the 7th of July 2025. For new homeowners entering into a residential site agreement with Lifestyle Communities, the deferred management fee is now calculated on the homeowners' purchase price. As previously announced, we will offer all existing homeowners the choice to move to a deferred management fee calculated on purchase price once the appeal of the VCAT decision has been determined irrespective of the outcome. The key advantages of offering the new deferred management fee model to all existing homeowners after the VCAT appeal enables homeowners to be in a position to make a fully informed decision. We anticipate this offer will generate substantial goodwill and sentiment amongst the homeowner community. Any goodwill generated is anticipated to contribute to homeowner satisfaction and harmony and protect and strengthen a strong sales referral rate. This approach assists with our continued strengthening of the Lifestyle Communities brand and reputation. Whilst reducing potential litigation and regulatory risk that may be associated with offering the new deferred management fee model prior to the outcome of the appeal. As a reminder, on the VCAT case, Justice Woodward decided on 2 key elements as follows: one, the Residential Tenancies Act does not prohibit a deferred management fee. Two, the deferred management fee must be an amount capable of being accurately calculated as at the date of entry into the residential site agreement. Justice Woodward consider that because the original deferred management fee clause was calculated as a percentage of the homeowners sale price, which is unknown at the time of entry into the agreement, it is therefore unable to be calculated as an exact amount and therefore, void. This is the key point that is under appeal. That said, to reiterate, we will offer all existing homeowners the choice to move to a deferred management fee calculated on purchase price once the appeal of the VCAT decision has been determined, irrespective of the outcome. As set out in our FY '25 results presentation, if 100% of existing homeowners as at the 30th of June 2025 were to move to this new model, the estimated potential adjustment to the carrying value of the deferred management fee component of investment properties would be up to $117 million. Lifestyle Communities also advises it has received a notice of listing from the Court of Appeal, the Supreme Court of Victoria. The applications for leave to appeal and the appeals, if leave is granted relating to the orders made by President Woodward in VCAT will be heard by the Court of Appeal on Tuesday, 23rd of June 2026. The court will then deliver its decision in due course. So just to repeat, the date for the case to be heard will be on Tuesday, the 23rd of June 2026. The court will then deliver its decision in due course. Moving to Way to Grow, the introduction of choice and expanding our market opportunity. To recap, for new homeowners entering into a residential site agreement with Lifestyle Communities, the management fee is now calculated on the homeowners' purchase price. Further to that, new homeowners can now choose when to pay the management fee upfront or when they sell. Lifestyle Communities aims to have a best-in-market model, providing choice to customers to either free up cash now and pay later or buy with no exit fee. Buyers can choose when to pay their management fee either 10% upfront or up to 20% when they sell. Soft launch took place in December 2025, with full rollout now in market. And to date, we have had 5 upfront management fee contracts signed with the first settlement having already taken place. I will hand over to Angela to talk to our Way to Build and development pipeline. Thanks, Angela.
Angela Farbridge-Currie: Thank you, Henry, and good morning, everyone. In relation to our development pipeline, during the period, we completed the settlement of the 4 land sales previously announced as part of our strategy to right size the land bank and carry 4 to 5 years of supply. Following the divestments, we retain a well-balanced portfolio that supports the next phase of the development pipeline as existing projects complete. Our portfolio and pipeline now sits at 5,750 homes with around 4,250 currently occupied and a further 1,500 homes remaining in the pipeline. In the graph to the top right-hand side of this page, you can see that 756 of these homes remain in developing communities and a further 738 homes remain to be developed from the retained land bank. As we deliver the pipeline, we will continue to be market-led in our pricing strategy, which will impact development margins in future periods as we follow the cycle and work through the existing projects. However, as we've previously noted, the ongoing drivers of demand for the sector remain and continue to intensify. We have an aging population in need of downsizing solutions against the backdrop of housing undersupply with additional pressure being felt due to lack of affordability. The delivery of our pipeline and future projects plays an important part in addressing each of these issues. Moving to an update on our debt facility restructure. As we previously announced, we've taken proactive steps to restructure our debt facilities, rightsizing down from $571 million to $375 million. The new facilities became effective in January 2026, and simplify the financing structure, following a reduction in the lending syndicate from 4 to 2 lenders, while providing longer tenor with no ICR covenant until the 30 June 2028 reporting period. The new facilities are provided by PGIM Inc., one of the world's largest pension funds and a provider of long-term debt and one of our existing lenders, National Australia Bank. While the balance sheet has delevered since the May 2025 peak, the transaction provides ongoing funding flexibility as the business navigates the recovery in the Victorian property market. Under the revised facilities, during the ICR relief period, a review event will occur if the number of new home settlements at each reporting period fall below certain thresholds, which for FY '26 is 185. The loan-to-value ratio was also varied down to be less than 55% during the covenant relief period and steps back up to less than 65% from the June 2028 reporting period. Due to the longer tenor of the PGIM facility, the weighted average cost of debt is expected to increase. However, this is expected in part to be offset by a reduction in unutilized facility fees due to the lower facility limits. Our new facilities have been supported by 2 high-quality lenders in NAB and PGIM. We value their support and their commitment and thank the exiting financiers for their support in the Lifestyle communities journey.
Henry Ruiz: So moving to our business performance in to new home sales. We observed sales volumes continuing to rebuild throughout the first half with 2 quarters of sequential growth, as you can see on the slide. Our recovery in sales has delivered double-digit year-on-year improvement in the first half with total net sales of $110 million for the period. Pleasingly, the conversion rate from face-to-face appointment to sale has also improved from a historical run rate of approximately 22% to now being circa 26%. We have maintained a continued focus on site activations to drive more prospects to visit and experience the communities for themselves. As we look further ahead to the second half, with short-term economic uncertainty, we have observed some consumers are beginning to show some hesitation in committing to listing their current properties for sale, signaling a softening in market sentiment. Moving to resales performance. Our established resales area has observed the strongest level of resales in recent periods with 98 sales. We play an important role in helping our existing homeowners sell their properties when the time comes for them to sell out of one of our communities. Lifestyle Communities resale approach utilizes a dedicated in-house resales team and a unified approach across both new and established sales. It is an empowered sales process where homeowners are in control of the asking price and the home presentation. Notwithstanding that a great bulk of these 98 sales did not create a deferred management fee revenue event following the VCAT decision, it does bring the next turn of the new management fee into play with new homeowners creating value. The number of homes on market has decreased from 56 at the 30th of June 2025 to 50 at 31st of December 2025, which represents approximately 1.2% of the portfolio, consistent with historical run rates. Moving to our inventory optimization. As we highlighted earlier, one of our key strategic initiatives is to reduce excess inventory levels in line with our optimal range. The team has been laser-focused on selling completed homes with some targeted adjustments to our pricing to meet the market. We have also paced our build rates to match sale order rates to minimize further inventory buildup. Since the 30th of June 2025, we are pleased to report we have realized a circa 30% reduction in unsold inventory. As at the 31st of December 2025, we are carrying 180 unsold completed homes, down from 257 reported in June 2025. As at the 31st of December, there are 9 unsold homes currently under construction compared with the 12 that were under construction in June 2025. In addition to the above, $31.2 million of completed homes are sold and awaiting settlement. Looking ahead to the second half of FY '26, the team will continue to drive this strategic initiative. Moving to our annuity income stream. Ultimately, our strategy is to sustainably grow the annuity income generated from the number of homes under management, and these are indexed at the greater of CPI or 3.5% per annum. For the first half of this financial year, total annuity revenue was $26.7 million, which includes gross rental income of $25.3 million, up 11.9% from the first half of FY '25. This growth does not include deferred management fees related to the VCAT impacted contracts, while the appeal is ongoing. As a reminder, for all new customers, the upfront management fee is 10% of the purchase price or a deferred management fee, which increases at 4% per year capped at 20% of the purchase price. Average tenure of established settlements during the first half of FY '26 was circa 7 years. I will now hand over to Angela, to talk through our financial results. Thanks, Angela.
Angela Farbridge-Currie: Thanks, Henry. Turning to the income statement. As Henry noted, we reported an underlying profit -- operating profit after tax of $16.1 million prior to statutory accounting adjustments. The operating profit is down by approximately 28% from the prior half year, impacted by lower new home settlements and development margins, which I will touch on shortly. The operating profit has also been impacted by lower DMF revenue following the VCAT decision and a greater portion of interest costs expensed this half year relating to the land bank, which as per accounting standards are not capitalized until the development works commence. The operating business continues to grow with site rental revenue increasing 11.9% from the prior corresponding period, supported by an increase in homes under management and annual rent increases, which were effective 1 July. Development margins were lower this half year at 11% due to targeted price adjustments to meet the market. However, they are tracking in line with the second half of FY '25. Lower margins are expected to continue for a period of time as we work through the inventory position and recovery of the Victorian property market. With regards to costs, you'll note that there's been an increase in sales and marketing costs from the second half of FY '25, which is driven by the launch of our Way to Live brand campaign. Corporate overheads saw modest growth of 2.5% from the prior corresponding period contained to inflationary levels. We'd like to draw your attention to the statutory adjustments at the bottom of the table, which are comprised of fair value adjustments on investment properties and some final adjustments recognized relating to land sales. We've provided a full reconciliation of these items on Page 34. In relation to fair value adjustments to 31 December, we have recorded an operating fair value uplift attributed to settlements and rent increases of $21.3 million. These are shown as Categories 1 and 2 in the table to the left of the page. In relation to Category 2, uplift at settlement, I would like to highlight that the adjustment of $11.2 million was lower than prior periods due to the reduced DMF values per home of $18,000 versus $64,000 in the prior period following the VCAT decision. The reduced DMF value per home reflects the impact of the VCAT decision on existing contracts and each site rolling on to DMF on entry price at the next turnover event. You will note in Category 4 at the bottom section of the table that there have been fair value adjustments relating to VCAT proceedings of $5.2 million. This represents the fair value of contracts that are not impacted by the VCAT decision and the value has been recognized on the basis that these amounts can be charged. And finally, in Category 5, there's been a further $3.3 million of adjustments relating to land sales, in particular, residential lots at the St. Leonards development, which were contracted for sale in the period. Moving to the balance sheet. As Henry mentioned, the focus on selling through built stock has resulted in a 30% reduction in the number of unsold homes in the system from 30 June and in turn, a reduction in the carrying value of inventories on the balance sheet. We expect further reduction in the carrying value of inventories in the coming period. Staying with assets, both assets and investment properties have reduced following the completion of the land sales, noting that the reduction in investment properties is due to the sale of Ocean Grove 2, but is offset by the fair value increases for the period. These land sales in conjunction with working capital realization flow through to a reduction in borrowings with the debt balance decreasing to $353 million at 31 December and net debt of $323 million once cash balances are taken into account. Debt levels are expected to reduce further over the balance of the financial year as inventory continues to reduce. Turning to the cash flow. Despite the lower level of settlements in the period, we are pleased to report positive operating cash flows of $41.2 million, up from negative $12.9 million in the first half of FY '25. The improvement is a result of a reduction in development expenditure, which reflects both disciplined management of build rates and our developments in progress passing the peak development spend phase. More specifically, in the first half of FY '25, infrastructure works by way of clubhouse builds were ongoing at Phillip Island, Riverfield, Ridgelea and St. Leonards - The Shores in addition to civil works at Ocean Grove 2. In comparison, infrastructure works for this half mainly related to the tail end of Ridgelea and St. Leonards - The Shores Clubhouse builds, which welcomed homeowners in October 2025. The bottom section of the cash flow provides a reconciliation from operating cash flows to statutory cash flows. You can see that $102 million of cash flows were received from the land sales in the period with a flow-through to repayment of borrowings, which totaled $110 million for the period. Looking ahead, we anticipate full year positive operating cash flows as projects continue their capital recovery phase, which is expected to flow through to a further reduction in borrowings. I will now hand back to Henry, who will take you through the outlook for the second half of the year.
Henry Ruiz: Thanks, Angela. So we continue to execute in FY '26 against a clear plan with the right team in place. We are focused on getting strong and positioning the business for the next development cycle. Disciplined execution is well underway against our refreshed strategy. Our enhanced marketing approach and refreshed brand position has launched and is already bearing fruit. We are maturing our sales approach to focus on both sides of the market, helping prospects purchase a home in one of our communities and assisting them to sell their existing home efficiently. Our balance sheet deleveraging is well progressed, and we have restructured and rightsized our financing arrangements with longer tenor and flexibility. We continue to sell through built stock and have rightsized our land bank. And while the VCAT decision timing remains unknown, we are focused on our homeowners, continuing to drive satisfaction with more work to be done. Just to recap, our new home settlements pipeline status as at the 16th of February 2026, we have completed 163 new home settlements. We have 202 total contracts on hand and of the 202 contracts on hand, 98 relate to homes that are expected to be available for settlement in FY '26. Of these 98 contracts available for settlement in FY '26, 28 customers have unconditional contracts on their current homes and are booked to settle prior to the 30th of June. 49 customers are actively marketing their own homes for sale and have not firmed up a booking date as yet. And 21 customers have placed deposits and are yet to list their homes for sale. In the second half, shareholders can expect to see further deleveraging of the balance sheet and full year positive operating cash flow as we continue to target inventory reduction and knowing that our communities in progress have passed their peak development spend phase. As we highlighted, communities in progress contain sufficient supply. So no new project launches are planned in this financial year, subject to market conditions. We will continue to be market-led in our development and sales approach. Due to the lag between sales and settlements, lower prior period sales rates will flow through to future settlement numbers. Despite some near-term market headwinds, the fundamental drivers of demand for independent downsizer living options remain strong, including an aging population, decreasing affordability and the availability of suitable properties. As we continue to mature our platform as one of the longest-serving land lease operators in this country, we are well positioned to realize the long-standing potential. Thanks for listening, and I will now hand back to Anita for any questions.
Anita Addorisio: We now welcome your questions, and we'll commence by addressing verbal questions before taking written questions. [Operator Instructions] So first up, we do have Murray Connellan from Moelis Australia.
Murray Connellan: I was hoping you could give us a little bit more color on sales rates at the moment. It looks like if we -- if we look at the update that you guys put out at your AGM on the 19th of November, there have been, if my math is right, about 32 net sales in the last 3 months. That's obviously, going to be affected by the Christmas period, though, so probably not necessarily reflective of a proper sort of monthly sales rate. Could you just give us a little bit more context around level of inquiry at the moment, how that's changed over the course of the last 6 months and where we are today? And then how -- I guess what that pipeline looks like, please?
Henry Ruiz: Sure. Thanks, Murray. Look, I think if you reflect on our typical December-January period, there's obviously seasonality in that, and it tends to be a lower inquiry and sales period. I think what we have seen is that's been magnified somewhat with some of the uncertainty around the economy. Inquiry rates are holding up well, like we are still booking appointments, but people making a decision is really the point of inflection. We're also seeing a slight skew towards properties that are established at slightly lower price points. So that's what we can see at the moment. We're trying to control what we can. And so we're continuing to drive hard around, like we said, targeted price adjustments for stock that is on the ground and continuing with our marketing campaign that we know is bearing fruit, but the consumer confidence piece is something that we have a watch on.
Murray Connellan: Then just touching on your pricing strategy as well. You've obviously been in a sort of strategic mindset that is quite strongly focused on reducing that working capital balance, reducing those inventory numbers. Do you think you might be in a position to start being a little bit more margin focused again as we look ahead and I guess, noting that the balance sheet is in much better shape? Or would you still be focused on, I guess, getting those inventory numbers lower and closer to targets and I guess, more of a focus on working capital still rather than margin?
Angela Farbridge-Currie: Yes. Thanks, Murray. You are right. We will remain focused as we move forward with that strategic initiative of continuing to focus on a reduction in the inventory balance, and that will continue to see us work on meeting the market with regards to the pricing, to continue with that targeted price adjustment strategy to cycle through that inventory and recover the working capital.
Henry Ruiz: Then moving a little bit further out as we start to build -- we're going to be data-driven. So I mean we've got very good insights now around what is selling well in terms of property type configuration and price based on location. So you can imagine that is what we will start to build towards that will improve margin. And the other thing we said strategically is that as the market improves, we will follow the market up. So we will, yes, reflect the market both in its down cycle, but we're looking forward to the up cycle as well.
Murray Connellan: Has the way that you build and the -- I guess, the cost inputs changed materially in the last year?
Angela Farbridge-Currie: Not materially in the last year. Obviously, the bit of a heat has come out of the construction pricing, but we are probably facing into a cycle where, particularly in Victoria for a period of time, our construction costs might outpace the cost of house growth prices.
Anita Addorisio: We have a question from Connor Eldridge. Connor, can you please advise who you represent?
Connor Eldridge: It's Connor from Bell Potter here. If I'm right, I'll go ahead with my question. I was just curious around the comment you made around the trading conditions down in Victoria, particularly the comment just around that you're seeing recent signs of softening. I was wondering if you can just expand on that a bit more and if that's, I guess, the rate hike causing that or what in particular are you referencing there?
Henry Ruiz: Yes. Look, I think it's a confluence of a number of things and not to overstate that comment, but it's really just around our demographic and prospects coming through are probably -- if you look across the market and people considering selling and if this is the right time for them to sell, are probably the most cautious as a demographic. The second part is it's the one opportunity for them to crystallize almost lifetime of work value. So as they look around and see that properties are staying on market for longer and maybe not achieving the prices that they were hoping for, that just gives them a moment for pause. But like I said, the level of interest in moving into the community stays high, the key consideration for them is, can I unlock enough equity as part of the transaction, which we know, and that's why we've got the deferred management fee model is very attractive to prospects coming into our communities.
Connor Eldridge: Yes. Great. Maybe just one more for me. Just, I guess, in light of the current environment and conditions on the ground, is there a, I guess, a metric that we should be thinking about in terms of like your, I guess, target level of completed unsold inventory moving forward?
Angela Farbridge-Currie: You'll see in the deck, we talk about our optimal inventory levels and seeking to maintain around 15 to 20 homes per site. Now that will obviously vary depending on the stage of a community's life cycle. So -- and you'll also see based on current inventory levels that there is some further work to go. While there's been good progress made to bring those inventory levels down towards our more optimal level, there is further work to go to reach those targets.
Anita Addorisio: Next, we have [ Miriam Prichard ] from UBS on the line.
Unknown Analyst: Can you quantify the level of discounting that is currently being offered to clear inventory to optimal levels?
Angela Farbridge-Currie: Yes. Thanks, Miriam. Ultimately, the level of discounting will vary on a community-by-community basis. And at the moment to date, there has been -- and you'll also -- if you look at the movement in our development margins, you can get a feel for potentially the size of some of those discounts. It does vary, but ultimately, on average, stays within around the single-digit percentages.
Unknown Analyst: Perfect. And just on sales and marketing intensity, where do you see that normalizing over time?
Angela Farbridge-Currie: So we did take steps. You'll note that our sales and marketing costs are down from 2024 when I think they are around $22 million, and that came down to around $15 million in FY '25, and we are ultimately traveling broadly in line with that this financial year-to-date, noting that there has been some increase in spend from the prior half because of the launch of our brand refresh strategy as well. And we do -- while we don't expect a material change in the second half, probably some slightly lower spend given that spending was more skewed to the first half.
Unknown Analyst: Just last one for me. Thanks for providing your customer satisfaction score. How would that be indexing relative to peers?
Henry Ruiz: That's a really good question. It's actually very hard to get comparative stats across the peer set. The one thing I would say is our referral rate is a very important part of our sales process, both direct referral as well as a lot of our homeowners almost act like salespeople when people walk through the door and experience the communities. And we typically have spoken about that sitting around that 40% to 50% range. So we can only talk to our data, that would be a question that you would have to ask them.
Anita Addorisio: We now have a written question that has come in from [ Carl Tan ]. In consulting existing homeowners, have homeowners ever raised the option of abolishing the DMF altogether?
Henry Ruiz: Thank you for the question. Look, all of our homeowners on the way in understand our business model. And one of the key attractive elements of it is their ability to free up more cash as they enter into the community. So it's less about what our existing homeowners have raised. I think what we have learned is that there are some prospects that were discounting us as a potential destination because they were not in favor of having a deferred management fee model. So like we outlined, we have decided to offer choice. And so now we offer people that want to release more cash on their way into the community or some people want to take that off the table for the benefit of their children or other reasons, or they're just in a financial position where that helps them, whether it be with their pension or other financial needs. So really, the key message is we're now catered for both, and we think that expands our market opportunity and attractiveness.
Angela Farbridge-Currie: Thank you, Henry. We actually have no further questions at this point in time, either through the live or the Q&A box. So based on that, ladies and gentlemen, we have reached the end of this Q&A session, which brings us to the conclusion of this conference call. We thank you for your attendance today and invite you to contact the company via the Investor Center available on the company's website should you have any questions not addressed here today. Thank you all so much. The webinar will now end.