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Operator: Thank you for standing by, and welcome to the Ryman Healthcare Half Year Results Briefing. [Operator Instructions] I would now like to hand the conference over to Ms. Naomi James, Chief Executive Officer. Please go ahead.
Naomi James: Good morning, everyone. I'm Naomi James, Chief Executive Officer of Ryman Healthcare. Thank you for joining us for our half year results for the 6 months to 30 September 2025. With me today is Matt Prior, who commenced as Chief Financial Officer on the 31st of July; and Hayden Strickett, our Head of Investor Relations. We're going to be working to get through the presentation in around 30 minutes to allow time for Q&A before we wrap up at midday. Looking at the agenda, I'll provide an overview of sales, stock, operations and development before handing to Matt, who will speak to the financials and capital management. And I'll then provide an update on outlook and strategic priorities before opening up for Q&A.
Hayden Strickett: Starting on Slide 4. As you'll see from today's results, we are well on our way to delivering better returns and are doing the things we said we would do when we raised capital at the start of the year. This is the first positive free cash flow result that Ryman has announced in more than a decade. We have made substantial progress towards achieving our cost reduction target in the first half and increased our target for the full year. Our refreshed sales strategy is rebuilding momentum with 2 quarters of sequential growth at our new 30% deferred management fee. Our balance sheet reset is now complete with the full bank refinancing we announced at the start of the week. And we have today announced that we will hold an Investor Day in February, which will cover our strategy refresh and new capital management framework. Let me start with the first half highlights on Slide 5. And starting with our sales performance. We've seen a rebuild in sales volume for the first half with total sales of 704. While down on the second half of last year, which was a record, this was up on the fourth quarter of last year and is at a significantly higher value with the new level of DMF. On the operating side, we've stepped up the level of cost out. To 30 September, this is now at $40 million annualized, and we've uplifted the full year target to $50 million to $60 million. This is reflected in our financial performance with a significant improvement in operating EBITDAF and positive free cash flow for the half of $56.2 million on total revenue up 13% on both pricing and occupancy growth, while total costs fell 2%. We've completed the refinancing of all banking facilities, significantly extending the average facility tenor to 5 years. As part of this refinancing, we also improved our pricing and have more resilient financial covenants. Through the half, we completed an ASX foreign exempt listing, which we committed to do at the time of the capital raise. This is a pivotal step in broadening Ryman's investor base while reinforcing our commitment to the Australian market. Finally, we've made good progress with the strategy and portfolio review with additional land divestments bringing total contracted sales to $110 million. We will be coming back to the market at an Investor Day in February with an update on our refresh strategy and capital management framework going forward, including our dividend policy. Now jumping into the detail, starting with sales on Slide 8. We've seen continued improvement in sales effectiveness and contract conversion driven by strong lead generation from village open days and targeted sales and marketing initiatives. Looking at the first quarter, we saw a 12% step-up and another 9% step-up in the second quarter in our occupied sales. As a reminder, these are RV unit sales only, and we do not include care RADs in our sales numbers. This year, we introduced quarterly reporting. So you already have the sales figures you see on this slide. The new news is the update to our full year guidance to 1,300 to 1,400 units, which I'll speak to at the end in the outlook section. Moving now into pricing and the breakdown in sales mix. On Slide 9, you can see the changes we made to the pricing model are now fully in place. As a reminder for those new to the Ryman story, our sales, which are recognized at the point of occupancy typically lag contracting by 6 months on average. We made the shift to a standard 30% DMF on the 1st of October 2024. So contracts signed prior to that date have now been settled and the first half of this year reflects the pricing changes. You can see that 3/4 of new residents are moving in on our standard 30% DMF with the remaining quarter being a mix of DMF options, demonstrating the flexibility in our pricing framework across DMF and unit pricing to meet individual needs. Our contracts are long dated and the benefit of these changes will build over time with annual portfolio turnover currently at 12%. As well as the uplift in DMF, we're also seeing a significant step-up in weekly fees with an average 60% uplift in the level of weekly fees on rollover of units. Moving now to sales contracts on Slide 10. You can see again the significant improvement half-on-half coming through in our forward contract book with both increased contracting levels and a reduction in cancellations. Market conditions are still mixed across the regions. We are seeing early signs of recovery in Victoria, while Auckland is yet to show meaningful improvement, which is significant for Ryman with around 30% of the portfolio in Auckland. Our contracted level of stock is lower, reflecting the recent completion and settlement of presold units at Kevin Hickman and Nellie Melba. Stepping now into the breakdown between resales and new sales on Slide 11. Our average resales pricing has been broadly stable on first half 2025, while slightly down half-on-half due to mix impact. Independent units are down 2% year-on-year, while serviced units are up 1%. We've seen our gross resales margin, which reflects the cumulative capital gains on each unit continue to moderate from historical highs. This reflects the flat housing market we've experienced in recent years. We've seen resales volumes increase across both independent and service departments compared to the prior half. But you will see there is still a gap between sales and turnover, 81 units for the half, which means as we signaled at our full year results, there is a working capital drag through the half with an increase in resale stock and the payout balance. Turnover is an important driver of cash generation in our model through both DMF and capital gains. With improving resales, we have a significant opportunity both to increase cash generation and to release cash from the $330 million of bought back resale stock we have today. Turning to new sales on Slide 12. New sales have reduced, reflecting the planned ramp down in development in response to elevated industry stock in some locations. As a result, our level of new sales stock has remained broadly flat over the past 6 months. We do have elevated levels of serviced apartments following the opening of 5 main buildings over the last 18 months. This is a key area of focus for us, and we are considering a number of options to improve utilization of this product. Average pricing remains strong, supported by a favorable mix with 45% of new sales coming from Australia. And importantly, our total new sales stock value of around $470 million at the end of the half represents a significant cash release opportunity going forward. As we open the operations section on Slide 14, I'm pleased to share that Ryman has once again received significant external recognition. I know these award slides sound a bit repetitive given how many we've won over the years. But this is ongoing recognition across both the aged care and retirement living parts of our business, which truly reinforces the strength of Ryman's reputation. Importantly, our internal customer survey results have also continued to improve year-on-year across all parts of the village. It's been especially pleasing to see this progress in a year where we've undertaken a significant reset across many parts of the business. And I want to acknowledge the dedication and commitment of our Ryman team members who work every day to deliver great service for our residents and are working to make our business performance even more sustainable. Moving now to aged care performance on Slide 15. Starting with pricing, we have seen significant period-on-period improvement in both room premiums in New Zealand, up 10% on PCP and an average refundable accommodation deposits, or RAD balances in Australia, up 5%. These gains are in addition to the base care funding uplifts implemented in both New Zealand and Australia. In New Zealand, a base care funding uplift of 4% took effect from 1 July. We have also successfully trialed a new product for residents transferring to care from within the village, which we're now rolling out across all of our New Zealand villages. This allows us to grow the level of resident capital in care in New Zealand and gives our residents more choice in how they fund the cost of their care. In August, we communicated the closure of our 2 oldest rest home level care centers in Christchurch. Time to align with the opening of the 80-bed new Kevin Hickman facility, every resident has been supported to find a new home that meets their needs. Moving on to Slide 16 and the significant progress with aged care reforms across both Australia and New Zealand. In Australia, reforms have been enacted and are now moving into the implementation phase. Changes to allow a 2% annual retention of new RADs came into effect on 1 November. With our average incoming new RAD in Australia currently exceeding $800,000, this is expected to deliver a meaningful increase in revenue from new RADs moving forward. Ryman is already well progressed in meeting the new clinical care minute requirements, which become mandatory with the new funding changes. We've also seen significant progress made in New Zealand with the government announcing the establishment of a ministerial advisory group. While it is lagging Australia in undertaking the necessary reforms, we expect New Zealand will benefit from being able to draw on lessons from the Australian reforms, taking the elements that have worked well and delivered meaningful benefits while supporting the delivery of high-quality care without creating undue compliance burden. And the New Zealand government has been specific on the timing it wants to achieve, advised by the middle of next year to enable it to enact changes to the funding model in 2027. This will provide time for all political parties to commit to funding reform ahead of the New Zealand election next year. And there's a big focus on the reforms gaining bipartisan support has occurred in Australia. Moving now on to development. I'm pleased to announce today the appointment of Richard Stephenson as Chief Development and Property Officer. Richard brings deep sector experience with more than 20 years working across the retirement living and aged care sectors in New Zealand and Australia. The addition of Richard to our senior executive team positions Ryman for a return to disciplined growth and supports the continued delivery of high-quality communities for residents. Moving now to Slide 18, which sets out the status of our program of works across our in-flight projects. We've made good progress in the last half with the completion of the final stage at Nellie Melba completing the village, the completion and opening of the Kevin Hickman main buildings, the commencement of the main building at Patrick Hogan and progress of Keith Park Stages 8 and 9 with these independent apartments forming the bulk of our second half build guidance. We expect updated plans for our Hubert Opperman village to be finalized and approved next calendar year, allowing for the commencement of construction, which will be the first project we deliver under the outsourced model. And we continue to have more than 300 RV units sitting in our land bank for future stages on these projects, which have planning approvals and are ready for development as and when market conditions support it. Jumping forward to our land bank on Slide 20. In February, we announced that we were undertaking a comprehensive review of our land bank, which was independently valued at $376 million at 30 September. We have been exploring the best opportunities for growth in terms of both our existing villages and our greenfield sites and are also determining which sites would deliver better value for shareholders through divestment. A number of sites were identified for potential divestment during the early stages of this review, and we're pleased to report the successful sale of Park Terrace in Christchurch for $42 million and Mount Eliza in Victoria for $35 million. This is in addition to the existing contracted sales at Karori and surplus land at Nellie Melba totaling $33 million. We will provide a further update on our land bank review at our Investor Day in February and expect to have identified sites to be retained for future development as well as additional sites for divestment. Now I'll hand over to Matt to run through the financials.
Matthew Prior: Thanks, Naomi. As my first half at Ryman, it has been fantastic getting to see the opportunity to unlock value in the business on a number of fronts, which I will touch on today. For the result, I'll talk to the financial highlights in our P&L, cash flow and valuations as well as speak to the refinancing update, which we announced earlier in the week. Starting with Slide 22. As Naomi has spoken to, we have made meaningful progress in the first half, which is reflected in these financial results. I'll call out 4 highlights on this slide. Firstly, we have seen a significant improvement in financial performance with losses before tax and fair value movements reducing $57.6 million year-on-year, underpinned by revenue growth of 13% and disciplined cost control. Next, free cash flow of $56.2 million was positive, underpinned by strong net development cash flows and lower finance costs. And thirdly, acknowledging the quality of our $1 billion of unrealized development assets, which represents a material cash opportunity. Lastly, the full refinancing of our bank debt, which has extended average tenor to 5 years, improved pricing and introduced a fit-for-purpose covenant structure. The refinancing completes our balance sheet reset and provides a robust foundation to grow earnings. Moving to Slide 24. Strong revenue growth is a notable highlight for the half, driven by the benefit of both our growing resident base, up 4% year-on-year in volume terms and stronger pricing in both aged care fees and retirement village fees. Year-on-year growth in DMF revenue includes a one-off adjustment for the prior year period relating to a historical GST issue, which was disclosed at the full year result. Removing this impact, DMF was broadly flat year-on-year. There are a number of factors at play here, including the changes to our pricing model as well as the accounting changes made in the prior year. If we look at independent units, we have moved from a 20% to a 30% DMF, but with revenue recognition period changing from 7 years to 9 years. Similarly, service apartments have moved from the 20% to 30% DMF with recognition changing from 3 years to 4.5 years. This means that whilst the change in DMF contract terms is building a higher-value contract book, it will take time to flow through to the P&L, and this is shown in revenue in advance. In simple terms, revenue in advance represents DMF, which has been contractually accrued but not yet recognized in the P&L. The balance will underpin future DMF revenue. I would stress that our front book revenue profile across both DMF and weekly fees is significantly greater than the revenue in place from our back book, which supports our growth in years to come. Slide 25 shows the significant progress we have made in our cost-out programs over the past year. Non-village expenses reduced half-on-half by 27% to $54 million, with the majority of this improvement coming from last year's restructure to support services. Adding to this is also some reallocation of costs to villages following these operational changes. Village expenses increased 7%, reflecting additional capacity, which has come online, noting that we have opened 5 main buildings in the past 18 months. While cost savings remains a key focus for the business, this is being approached in a considered way given the importance of the Ryman brand and our strong resident proposition. Moving to Slide 26. Combining the revenue and cost improvements I've talked to, we have seen a $26.4 million year-on-year lift in operating EBITDAF to $40.1 million, a key measure we focus on internally to track the core operating performance of our business. I would note that this does not include any realized capital gains on retirement village ORAs, which are reflected in other metrics such as cash flow from existing operations. The chart shown on this slide shows the improvement with non-Village cost reduction and positive leverage in developing village growth providing the most benefit. Moving to Slide 27. A key strategic priority for FY '26 has been segmenting our financials between aged care and the retirement village parts of the business, which we will report on going forward. I'd like to highlight that this is a non-GAAP disclosure, which currently sits outside of our financial statements. Segmentation is based on property type with the aged care segment comprising our care centers and the Retirement Village segment comprising our independent living units, service apartments as well as common areas and amenities. I should also make clear that home care services provided to a resident in RV are included in the Retirement Village segment. Central to this analysis is the allocation of support services to each of the segments. A substantial amount of the support is provided through our office functions such as operations, clinical, procurement and contracting. Allocating these costs to the segments provides a complete picture of our cost structure and business performance. The output of this work provides metrics such as EBITDAF per aged care bed of approximately $15,000 on an annualized basis. For a scale operator such as Ryman, this is significantly below the full potential of our portfolio, and there are transformation projects underway to improve performance. It is also important to note that the figures shown on a per bed or unit metric are averages with variations seen throughout the portfolio. Our transformation progress will be reflected in these segment measures going forward. Slide 28 details our cash flow from existing operations, or CFEO, for short, which is down year-on-year when excluding interest. Robust cash flow from village operations aligned with the improvement in operating EBITDAF has been offset by lower net cash flow from resales. Resales cash flow continued to be impacted by growth in our bought back stock, which grew $53 million in the half. Excluding this, our cash performance would have been meaningfully higher. I'd also highlight that we have made some refinements to our cash flow methodology. The most significant change is the allocation of interest on unsold new stock and land bank to development activities. Whilst much of this interest does not meet the criteria for capitalization, functionally, it still relates to our development business. Other changes include the allocation of sales and marketing costs between CFEO and CFDA and similarly, reallocating costs on land bank sites such as rates or site security to CFDA. The composition of CFEO shows the improvement in village operations, but this is held back by gross receipts from resales compared with the previous half, which had the benefit of stronger sales. Totaled against lower non-village expenses and attributed interest costs, there was a slight improvement in overall CFEO. Turning to Slide 29. We have seen strong net cash release from the development side of the business with our project spend reducing significantly as we sell down existing stock. The opportunity to release cash from inventory is substantial with approximately $470 million of new sales stock at 30 September. Consistent with my previous comments, the figures on this slide reflect our updated methodology with cost allocation to CFDA, including marketing and selling costs as well as allocating notional interest on unsold new stock and our land bank. Slide 30 shows the positive free cash flow for the half, which was the first time in many years for Ryman. Free cash flow of $56 million was partly offset by a headwind of $42 million in other movements, primarily FX with the 3% decline in the New Zealand dollar for the period. While this has had a negative impact on the Australian dollar debt, I'd note that our Australian dollar assets have also seen an FX uplift, which is an offsetting benefit to our balance sheet and our NTA. And as Naomi has already highlighted, there have been subsequent land bank sales that will benefit our second half cash position. Turning to asset valuations on Slide 31. Independent valuations across our sites consider unit and pricing information, capital spend and site-specific factors with further details in our presentation appendices. The half saw a positive fair value movement of $3.2 million, reflecting a number of changes, including price, but the outcome was broadly flat, taking into account FX and the previous result adjustment. There has also been a small impairment for 3 care centers as detailed in the financial statements, noting that the broader care portfolio is valued annually. The overall investment property carrying value and net tangible asset value remained broadly flat against the previous result. My final slide on financial performance provides a summary of our profit and loss with per share measures, which I won't speak to in detail given most line items have already been covered. Earnings per share of negative $0.044 was down for the half with the improvement in operating earnings offset by lower fair value movements as well as the higher number of shares on issue following the February equity raise. Now on Slide 34. As announced earlier in the week, we have successfully completed a full refinancing of our syndicated loan facilities. This extends our weighted average maturity to nearly 5 years with no maturities until FY '31. To achieve this, we have received strong support from our lending group who has recognized the turnaround that is underway at Ryman by providing funding out to 7 years. Our new ICR covenant is 1.50x adjusted EBITDA to interest, excluding interest on development debt. This designated development debt includes our committed developments that are in flight as well as recently completed care centers in New Zealand. Importantly, our existing covenant waiver remains in place with first testing of the new covenant to apply from September 2026. Overall, this refinancing retains significant funding headroom of over $500 million and provides a strong foundation to support our strategy and long-term value creation. Finishing my sections, I'll talk to treasury management on Slide 35. Since the equity raise earlier this year, we have delivered annualized interest savings of around $67 million, driven by lower debt following the February equity raise, positive free cash flow and a reduced cost of funds. With nearly 70% of drawn debt now on fixed rates and an average hedge tenor of 3 years, we have strong interest cost certainty. Combined with a lower debt profile post equity raise, this positions us for substantially reduced interest going forward. Before I hand back to Naomi, I'd like to thank all the operational teams across Ryman's Villages as well as the development and support teams in Christchurch, Auckland and Melbourne that helped deliver these results. I'll now hand back to Naomi to talk to our outlook.
Naomi James: Thanks, Matt. On Slide 37, we have our updated full year sales guidance to 1,300 to 1,400 RV units. This reflects expected broadly flat total sales half-on-half in a mixed market with new stock delivery weighted to the first half and a lower level of new sales. In these numbers, we haven't assumed a recovery in the Auckland market, which makes up approximately 30% of our portfolio by number. We have increased our cost saving target for the year to $50 million to $60 million annualized. We have also confirmed the top end of our build rate guidance for the year at 330 units and beds. And we have moderated our CapEx guidance, reflecting the release of contingency on a number of in-flight projects, which have completed as well as some timing -- cash timing impacts. And we take a more disciplined approach to sustaining CapEx in the existing villages. Slide 38 gives you an update on the strategic priorities we announced at the time of the equity raise and what we said would be our focus in FY '26. I won't step through the slide as we've already covered each of these points through the presentation. But I would say we have made meaningful progress in releasing cash from the business, improving our performance and resetting the business for a return to disciplined growth. Let me wrap up on Slide 39. Our near-term focus continues to be on building our sales momentum, releasing cash from the balance sheet and driving operational efficiency across the business. Ryman is positioned for significant cash flow growth as the housing market recovers, aged care funding reforms are enacted, our aging population grows strongly on both sides of the Tasman and aged care scarcity increases. And I'm looking forward to sharing more with you at our Investor Day in February on our refreshed strategy, focused approach to growth and new capital management framework, including our new dividend policy. I will now open up for Q&A.
Operator: Your first question comes from Bianca Murphy with UBS.
Bianca Fledderus: First question is just on future development -- no, sorry. My first question was on your commentary that you are signaling that you will be returning to disciplined growth again. But at the same time, we continue to see vacant stock increase as well as bought back stock. And I know it, of course, takes a few years to develop a village. But can you just touch on the confidence, I guess, that Ryman is ready to return to growth again given where your stock levels are?
Naomi James: I think I caught all of that. But I guess just talking to, first of all, the stock levels, what we've seen half-on-half is obviously build rate and new [ stock ] sales rate much more closely match each other. And that's what we're wanting to achieve in terms of moderating the rate of growth in our in-flight projects, which has seen us defer some of those later stages. We are intending to bring those stages forward as and when the market conditions support those developments, and that will be done on a progressive basis. And in terms of our greenfield land bank and sort of future expansion around the existing villages, that's something that we're intending to come back and talk about further at the Investor Day in February.
Bianca Fledderus: Okay. That's helpful. And then I believe you previously mentioned that you expect stock levels to peak in FY '26. Do you still expect that to be the case? And if so, is your expectation that will be first half or second half?
Naomi James: So in terms of the stock levels, we've obviously seen those increase through the first half with resales being at a slightly lower level compared to turnover. We are very actively working to get those to match each other with the range of sales effectiveness initiatives that we've got underway. We are also a little bit dependent on market conditions, particularly when it comes to the portfolio in Auckland. And ultimately, that's going to determine the exact point in time that we reach that point and start to see that cash come back down and the buyback level come back down. So probably can't predict more precisely than that, Bianca, but we're certainly working very hard to get to that as soon as we can.
Bianca Fledderus: Okay. And then yes, following up on that, could you just talk about what you're seeing in terms of market conditions in the first weeks of the second half?
Naomi James: Sure. Do you want to talk to that, Matt?
Matthew Prior: Sure. Thanks, Naomi. So Bianca, in terms of what we're seeing so far in the second half, but before I do that, just rewinding slightly to the first half, in the first half, we did see higher volume of new sales and good movement on new stock deliveries with the rate of move-in probably a little bit faster than expected. In H2, I would say that we're optimistic given the recent cuts to the OCR, but it's really too early to say how those cuts will translate in terms of an uplift in current conditions. For October and November specifically, we've seen consistency with our first half sales performance, although we're entering this kind of quietly -- sorry, quiet seasonal period of December and January with this mixed market conditions as a backdrop. And as I said, optimism around the OCR cut, but it's too early to say how that will play through in the second half.
Operator: Your next question comes from Arie Dekker with Jarden.
Arie Dekker: First question, just on new sales stock and the ILUs in particular. Just given the influence of Australia in the first half. Just keen to get a bit of an indication of how much of that nearly 300 ILUs in new stock sits in Australia versus New Zealand? And then just related to that also, what your expectations are for pricing in Australia given the mix of stock that you have remaining there?
Matthew Prior: That's a very detailed question. We might have to come back to you offline as to the composition.
Naomi James: In the first half, Arie, one thing we'd point to is with the Nellie Melba final stage completing, we have had a number of sales come through from that. We had 76 units added in Nellie Melba. We are seeing good trading and market conditions over there, and that's a relatively recent thing. But we haven't, I don't think, provided quite the level of split that you've just asked us for in terms of the split between New Zealand and Australia. So that's probably the further detail we can provide around that.
Arie Dekker: Okay. No, sure. Just in terms of cost-out expectations, which have increased through the first half, which is clearly pleasing as you're spending more time in the business. I mean, could you just sort of characterize how far you've gone, I guess, in sort of peeling back the layers of the onion and whether your expectations would be that based on what's still to go that we could see further upsizing of that envelope through the balance of this year and into next year?
Matthew Prior: Thanks, Arie. So in terms of what we've seen so far is, obviously, we had $23 million last year. We initially expected $23 million this year. At the half, we've achieved $40 million. The current year savings are really across both non-village and village. I would say in emphasis areas, it's around the support services, as you would know, procurement as well, refurbishment CapEx and really village efficiency initiatives. It's really giving us the early gains that we're being able to talk to and now update and increase our guidance to the $50 million to $60 million. As we do more work, we'll be able to give you more confidence around the timing of that. But at this stage, not looking to change the original numbers in terms of total target.
Arie Dekker: I know I wasn't expecting you to. But what you're suggesting there is there is more work to do in terms of looking across the business and certainly potential for that to be increased further?
Naomi James: Yes. You'll remember, if you go back to the cap raise, Arie, we talked about a cash improvement target of $100 million to $150 million made up of a mix of cost and revenue. So that is still our overall target that we're working to. We've given you the cost indications to date. And one of the things we're mindful of is being able to give a clearer view around timing of when the revenue improvements will flow through as well. So that's probably something we're going to come back on in the new year with some further detail around it.
Arie Dekker: Great. Yes, that makes sense. And then just on the RAD retention benefit that's coming in, in Australia. I mean, what's your -- obviously, too early to see on the evidence, but I guess, just some comments on your expectations with regards how it might change the mix and the SKU of residents you see coming in on a DAP versus a RAD. Do you have any comments there?
Naomi James: I don't think we'd expect to see it change the mix, Arie. We've certainly seen a little bit of benefit ahead of the 1 November commencement for residents looking to avoid that new regime. It applies to new RADs from the 1st of November. But typically, it's driven based on the capital that individuals have access to. And it's also strongly linked with the tax and means testing settings in Australia. So it's fairly resident circumstance specific as to how those choices work rather than tied with that DMF retention.
Arie Dekker: Okay. No, that's good. And then just, I guess, returning and just asking a specific question back to the answer you've already given with regards to that the resales and improving volumes there to bring it more in line with turnover and then clearly, clear inventory as well. I guess just on the tools you're using, I guess we can't sort of see it come through at an aggregate level. And then also, there's obviously the phasing of it all and that in terms of settlements. But can you just talk to the extent to which you are using price as a tool in resales to increase volumes, whether you are doing that or not? And what sort of levels where it is being applied?
Naomi James: Sure. So we're using a range of initiatives, Arie, and price is really only one of those. I think we signaled at the full year that we would use pricing in a targeted way where we have building resale stock or where we have older new sales stock. I won't talk to sort of anything specific around discounting. It's obviously a competitive market. But price is certainly not the only thing we are doing. We have a range of other incentives and measures in place targeted at a village level and also have invested quite a bit in the training of our sales staff to really make sure that they've got sort of the right toolkit, the right range of incentives and are able to do a really great job at selling the new DMF offering, which they are really hitting their strides with. So it's a range of things with targeted pricing really just being one part of it.
Arie Dekker: Okay. And then just the last question for me, it's a quick one. Congratulations on the divestments of Mount Eliza and Park Terrace. Could you -- I may have missed it, but could you just comment on where those -- the values achieved for those versus the FY '25 book value?
Naomi James: Yes, they're broadly in line with book.
Operator: The next question comes from Will Twiss with Forsyth Barr.
Will Twiss: Thanks for the extra disclosure on the Village and the care earnings. If we think about that $15,000 per bed EBITDAF in aggregate, can you give us an idea of what that looks like if we think about mature versus non-mature care centers? And then a follow-up to that, what is the split between what that looks like in Australia versus New Zealand?
Matthew Prior: Hi, Will. It's Matt. I'll talk to the Australia and New Zealand piece. So care in Australia is more profitable. It reflects the funding reforms that have occurred in that market. And whilst we're not providing the $15,000 EBITDAF per bed split between the 2 markets, you can see from the country segment reporting in Note 2 that Australia has a higher margin at a country level and the bulk of the P&L is care. So hopefully, that's helpful in terms of giving you an indication. And look, with the lower margin in New Zealand, it really is particularly as a result of the funding environment. So a scale operator like Ryman, we should be looking to get efficiencies from that scale, and we will from our transformation programs to improve performance. But that said, lower earnings in New Zealand aged care is reflected in our valuations also, and we do need to see meaningful improvement in funding to support investment in new capacity. And just on that, the same applies to obviously mature versing immature care centers. This is a high fixed cost business. They benefit from occupancy. So you should expect obviously a lower margin in a more immature care center.
Will Twiss: Okay. Great. But maybe if you could just give us a ballpark of where you think that EBITDAF per bed would be in a mature center today?
Naomi James: Yes. I think, the complex thing there is, obviously, the premiums we're realizing do vary quite a bit across the portfolio. So it's not a consistent position. It is region-specific. And I think in terms of perhaps that portfolio target in Australia and New Zealand, that's something we might come back in the new year and give you a further view on what we think a fully optimized position might get to, including the benefit of the sorts of aged care reforms that are being looked at in New Zealand.
Will Twiss: Okay. No, that all makes sense. And then just moving to the village side. There's quite a big delta, sort of $50 million, $60 million between the village fees and the village OpEx. When can we sort of expect that delta to start closing materially? And then I guess, following up from that, is it still your expectation that over time, you can get these 2 lines to closer to breakeven?
Matthew Prior: Yes. Good question, Will. So focusing on RV, not care. Looking at the costs I should point out the cost is a blend of independent and serviced and the cost of delivering service is higher within that blend. You can see in the appendices that we've given the [ IA ] kind of unit fees of approximately $156 based on the current back book, if you can think about it this way, with the costs being at a current point in time. My observation coming in as a CFO is this is an industry issue. It's affecting a number of operators in this kind of high inflationary environment. A large part of the reason that Ryman has lifted its fees after many years of keeping them flat is to partly address this issue. So the front book will address this in combination with some of the cost-out programs that we have underway, and that will close that gap on the RV side progressively over time, but it will take time.
Will Twiss: Great. And then just last one from me. If we think about the kind of step down in maintenance CapEx in the first half, how should we be thinking about this as a base going forward?
Naomi James: I think the step down, and it's not a significant step down, Will, in terms of FY '25, it really just reflects a different level of cost discipline across the business and financial discipline across the business. We want to invest in the existing villages, but do that in a way that really is value-oriented. And so there will be some movement period-to-period based on opportunities, particularly where we can create value through investing in the villages. But in every dollar we're allocating, we are really making sure it is well spent, and that's reflected in the numbers.
Operator: [Operator Instructions] The next question comes from Stephen Ridgewell with Craigs Investment Partners.
Stephen Ridgewell: Congratulations on the improved free cash flow results and progress on improved operating results. Look, I just wanted to touch on the operating EBITDAF result, which you called out earlier, Naomi was up sort of 200% or so off a low base. And then maybe also look at the resale gains because if we include that to the operating EBITDAF, that number is down 3%. So given the cash resale gains, look to be down about 34%. I just want to follow up on Arie's question on the decline in resale margins. Directionally, it's as expected but the magnitude does perhaps look a little bit steeper. And I just wanted to see if there were any call outs with regards to mix or other considerations? Or does that kind of fairly reflect the level of discounting that Ryman has connected over the half to clear the resale stock?
Naomi James: I think in terms of just what's driving that reduction, which is obviously not new to this half, Stephen. We see the HPI inflation in recent years as a significant factor. And remembering that in resales, about half is service departments, which are turning over on average in 4.5 years and half is independent at about 9 on average. And so particularly with service departments, you see that more recent lower level of house price inflation having an impact. And so that's sort of as significant a factor in terms of the resale margins. The pricing, I think, is more of a factor in terms of mix as well. And so as we see newer villages making up a larger proportion in the volumes and not necessarily having the same level of resale gains just purely as a percentage terms in terms of house price inflation, that's also flowing through to sort of what you print in terms of that overall percentage margin change.
Stephen Ridgewell: Okay. So you're calling out maybe a slightly younger average tenure potentially for those resales because just to -- I guess we did see a 540 bps sequential decline in independent gross resale margins on Slide 11 and 350 bps sequential on service. So that would seem a bit steeper than what we're seeing across the rest of the sector and the housing market generally. So it reads more -- without that color, did more discounting, but you're suggesting it's more of a mix shift. Is that right?
Naomi James: Look, I think it's a combination of those things, Stephen. So rather than one of them. And just to call out the -- we've obviously got the city villages as well as the regional ones. We've got the newer villages as well as the older ones. And then we've got the service department and independents in the mix and all of that overlaid with broadly flat HPI over the last 5 years or so. So those factors are all playing into that resales trend. But obviously, pricing is a factor as well.
Stephen Ridgewell: Okay. And I guess if we look into the second half, I mean, are we going to see -- should we be seeing a stabilization in those, if you like, like-for-like resale margin trends? Or is this a fair read is this the new normal just given where the housing market is in this part of the cycle and what you need to do to get clear stock?
Naomi James: Look, it's obviously fairly mix dependent, Stephen, but I'd expect there's potential to further downward, but with perhaps a slower moderation in that in terms of where it trends, but very mix dependent in terms of where the sales are coming from.
Stephen Ridgewell: Okay. And then just maybe one on the CapEx. I think it's been mentioned earlier that the CapEx guide was lowered a bit. Naomi, you sort of called out cost discipline. I was just wondering as well, though, does that pull down and what we're seeing is that the build rate is at the top end of the range, prior range and the CapEx guidance is lowered. Does that reflect perhaps lower CapEx going into next year or lower build rate going into next year? I'm just trying to interpret the moving parts there because typically, if your build rate was at the top end, you'd expect CapEx to be a little bit higher from where I sit. Just trying to understand that.
Naomi James: So the way I'd think about the build rate, Stephen, is really just that we're expecting to deliver in full to schedule rather than any change in development activity. In terms of the CapEx, there's a couple of things in that. One is that we have released meaningful contingency from some of the projects that we've completed, which is really pleasing. And then there's some timing in that. There's always a -- we're obviously completing Keith Park final, the current stages 8 and 9 near the year-end. We're getting towards the end of Northwood around the year-end. That just means you do sometimes have some timing impacts as to when that can flow through those projects. No change to schedule or delivery in any of that -- impacting any of that.
Stephen Ridgewell: Okay. And maybe just one last one for me. Just on the volume guidance upgrade, it's obviously good to see. Just maybe a question on the mix. And Matt, you sort of called out kind of earlier that perhaps you'd see some improvement in continued improvement in resales in the second half, but new sales perhaps sort of dipping a little bit just given obviously the front books coming back. I mean I was just wondering if you could give us some indication of maybe how sharp that mix shift you might expect to see in the second half on the settlements. And I appreciate it's early days, but is it likely to be quite a different mix in the second half or incrementally different, if you like?
Matthew Prior: Yes, you had 2 kind of large tranches of stock come through in the first half in terms of Nellie Melba and Kevin Hickman. So those 2 definitely play a role in first half new sale performance, and you can see the mix from what we have disclosed in our trading updates and the result. So it probably is more of an even spread in H2 than what it was in H1, which had the benefit of those 2 large tranches. So I'm not going to give you specifics, Stephen, in terms of the combination of those factors into H2, but hopefully, that's directionally helpful.
Operator: The next question comes from Nick Mar with Macquarie.
Nick Mar: Just following on from that. Just within the contracting rates, can you give us any idea of how that's looking on retail, just how close you're getting to the sort of termination run rate on a go-forward basis?
Naomi James: So Nick, I think you were asking how close is the resale contracting rate to matching the turnover rate? Did I hear that correctly?
Nick Mar: Yes. So within that sort of $674 million of new sales contracts in the first half, how close that is to the $619 million of termination?
Naomi James: So we haven't given a specific split in terms of the guidance, but we are certainly seeing that gap narrow. And while resales is sort of below where we want it to be, we're chasing that hard to get back up to that turnover level, and that's a near-term focus for us. So that's a near-term goal we are working to chase down. We have indicated, I think, in the guidance that new sales are probably a bit lighter in the second half. And so you'll factor that into sort of the resales rate through that period in how you read that.
Matthew Prior: And Nick, just to add to that, not just for the target of achieving turnover, but also to the extent there's $330 million of stock value attributed to that, which is something -- which is a large prize for us to get after in terms of cash release.
Nick Mar: Yes, absolutely. And do you think that the current set of incentives, tools, pricing, everything like that is enough to get you to that, notwithstanding sort of a material change in market conditions? Or are you sort of needing to wait for the market to pick up in Auckland to be able to actually execute on that piece?
Naomi James: I don't think we're waiting for the market to pick up, Nick. I think property is cyclical. We all know that, and we're chasing that down in the current market. It's just a little harder, particularly probably at the Auckland end. But certainly, in lots of markets, we're well exceeding that. And so our focus is on closing the gap.
Nick Mar: Yes. So my question was in order to do that sort of nearer term, do you need to run more discounting or bigger incentives to get the cadence up?
Naomi James: Not necessarily. I think it's a matter of continuing what's occurring, which is really using the full range of sales initiatives and options we've got to drive near-term sales performance.
Matthew Prior: And I think you've seen, Nick, in the half that there's been a trend in sales effectiveness towards better conversion and that conversion rate of leads through to contracts, through to settlements has been one of the highlights of the half. So to the extent we can continue to build and develop those tools, it goes beyond price in terms of sales performance.
Nick Mar: That's helpful. And then could you just talk through that resident funding trial that you've done kind of transfers to care and any intentions of sort of going back and allowing ORAs across other care beds in your portfolio and trying to sell down that way?
Naomi James: Yes. So I guess just starting with the resident. When it comes to care, our residents are coming either from within the village or often coming from outside the village. And so that resident fund product that we have trialed and are now rolling out is really about helping our residents transfer within the village and use the capital they have, whatever level of capital that might be to fund their care. We do also provide care in certain cases into service departments, and that's an ORA structure in terms of where that's used. But we also see daily accommodation premiums as a really important option because -- very often, care residents are coming to us at a difficult time in life. There's a lot of uncertainty around how long they might require care for and what level of care they might need. And so we want to have the terms and offerings right to sort of match the residents' needs. High occupancy in care is key to profitability. And so having a range of pricing options is what's going to support that. And we think this new resident fund adds to the range of options that our residents have in coming into care.
Nick Mar: Sorry, what specifically is the resident fund and what's the mechanism?
Naomi James: So it's effectively a capital amount that applies as a deposit to fund through both effectively the value on the capital as well as through drawdown of that amount to fund the care. So whatever level of capital an individual might have, they can use both the capital base and the drawdown from that to fund their care without needing to have separate funding or capital available to pay their room premiums. It effectively allows us to discount the room premium in using that capital in that way.
Nick Mar: And then the last part of the question, are you considering sort of having ORAs available over the [ balanced ] care portfolio in New Zealand?
Naomi James: We see that as one option, and it's an option that's used today in service departments and care suites. As to the extent of broader use of it, that's something we'll keep considering in really matching the range of pricing options to what residents are looking for. Occupancy is critical in care. So we want to be able to maximize occupancy and realize the premium for the accommodation in a way that's aligned with how the resident is best able to fund that. And not everyone has a capital sum and not everyone is wanting to sign an IRA at a point where they are moving them or a family member into care.
Operator: There are no further questions from the phone lines at this time. I will now hand it to Hayden for rest of Q&A.
Hayden Strickett: Your first online question is from David Kingston. Well done on an overall -- on the overall progress and positive free cash flow. When are you expecting positive EPS?
Matthew Prior: Yes. Thanks for the question, David. So EPS, as you'll see it in the face of the accounts, is driven pretty heavily by the fair value movements period-to-period. These are independent, hard to pick. You'll see from our fair value change from last year to this year, it was a substantial difference. But going forward, to the extent of build rate moderating and as well as valuation being stable, we wouldn't expect that to have the same degree of change. But that's the main factor affecting EPS beneath our operating performance.
Hayden Strickett: Your second online question comes from [ Francois ]. Sales application trends beyond the reporting period of September 2025 with a split of ILUs and care suites, please?
Matthew Prior: Thanks, [ Francois ]. We're not going to give the complete split, but I would say that it's continuing at a very similar level of contracting post 30 September. Again, we're coming into this quiet kind of December, January period. But what we're seeing to date across October and November is at a very similar level of contracting.
Hayden Strickett: There are no further online questions. I'll hand back to Naomi.
Naomi James: Thanks, Hayden. Thanks, everyone, for joining us today. Appreciate your time and look forward to giving you an update next year at Investor Day. Thank you.
Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.