day, everyone, and welcome to the Oceania Healthcare 1H21 Results Announcement Conference. At this time, I'd like to turn the conference over to Earl Gasperage, CEO. Please go ahead, sir.
Hello, everyone, and thanks for coming on the call this morning. My name is Earl Kasprich, as you just heard. For those that don't know me, I think I know just about everyone on the call. With me today is Brent Patterson, our CFO. And we're pleased, as usual, to bring you this presentation of our interim results for the 6 months ended 30 November 2020, which we've announced this morning.
There were a number of key highlights of the first half results that I'll quickly cover before presenting a brief update on our strategy and then an overview on our development. And then I'll hand the presentation over to Brent to present the detailed financial results for the period. Sorry, we're just waiting on the next slide coming up. Okay. So for those of you that have the slides in front of you, I'm on Slide 3 now, and we'll catch up with you with the visual when we can.
So firstly, the financial highlights of the period, and we improved underlying EBITDA compared to a heavily COVID impacted COVID-nineteen result in the previous 6 months. And earnings were back in line with the prior corresponding period at $35,000,000 And this is a pleasing result for the business given that in the 6 months to 30 November, we also had a government lockdown in Auckland and obviously ongoing costs of managing the risk of COVID-nineteen across our sites. The key highlights of that financial result was undoubtedly the strong sales volume across both our retirement village units and our KiaSweet product, with sales increasing by 44% on the prior corresponding period. And secondly, the 15% lift in our underlying earnings from our aged care business. And we noted in our last annual results for the year ended 31 May 2020 that our aged care earnings are at a point of inflection following 3 years of redevelopment and increasing the proportion of premium rooms in our portfolio.
So it's particularly pleasing to record that strong increase in earnings from our Care segment. Operating cash flow was also strong over the period, increasing from $57,000,000 to $75,000,000 which is 31% growth, and that's as a result of those high sales volumes achieved. Our total assets are now 1.7 $1,000,000,000 which is 12% growth year on year, reflecting the ongoing development capital expenditure invested in the portfolio. And also there was a $27,000,000 increase in the valuation of our investment property, and that was predominantly driven by changes to the CBRE assumptions that CBRE had made in response to COVID-nineteen back in May 2020. And in particular, they adjusted their year 1 growth rate back to 0 as opposed to negative 2% that the 31 May 2020 valuation included.
And that's reflected the sentiment that the property market has emerged better than expected since the government restrictions were largely lifted in June last year. As I've just mentioned in the bottom right of Slide 3, our sales volumes were a key feature of the interim result. We achieved 2 68 total sales in the 6 month period, and many new residents enjoyed the benefit of our retirement villages and care suites in what's been an uncertain year for them. As I mentioned, we're 44% higher in the prior corresponding period and 86% up on the sales achieved in the period before that in 2019. And just highlighting the resale volumes as well, the 21% increase in resale volumes compared to the prior period was particularly pleasing, because that's a key indicator of the quality of our annuity earnings now coming from the business.
Now on Slide 4, and as I mentioned, our aged care business is certainly demonstrating that it's past the point of inflection with improved occupancy and premium revenue streams, delivering a 15% increase in underlying EBITDA from this segment of the business. As those of you that have been with us for a few years will know we embarked upon the redevelopment of our sites following the IPO in 2017. And we've undertaken substantial redevelopment projects at a number of sites around the country, and we have 3 40 care suites that we've delivered in that 3.5 year period. When we undertook those redevelopments, we always expected to incur a short term reduction in earnings from the sites as the old facility was decommissioned and beds were closed. And that did cause some volatility in our aged care earnings over that 3 year period to May.
But what this interim period certainly demonstrates is that we're now past that point of inflection, and we're now generating higher occupancy levels as we sell down our care suites. And we're generating that premium resident funded revenue through the deferred management fees on the care suites. So combining those care suites that we've developed over the past 3.5 years and the standard rooms that we've converted the care suites. We now have 7 72 care suites in our portfolio, and that's more than tripled at the time of our IPO as we progress towards our target mix of 70 to 30 premium to standard rooms. So that's aged care.
In terms of the other key highlight I mentioned, sales growth. And again, despite losing another month of sales in Auckland during the government lockdown of August, September 2020, we did record 268 total sales and that's 83 sales higher than the prior corresponding period. There's no doubt the growth was fueled by the excellent job that the aged care and retirement village sector did generally by keeping our residents and staff safe during those government lockdowns and the heightened risk of COVID-nineteen. Coming out of that uncertain period, many residents that have joined us in the last 6 months have given us feedback that they did reflect on their well-being during the lockdown, and they could more greatly appreciate the benefits of living in a retirement village with a community of like minded neighbors in an environment that provides security and peace of mind. So of the total sales growth, our sales of Care Suites increased by 36% and sales of independent living units by 60% year on year, with Care Suite resale stock brought down to what we call normal levels compared to what we were holding at the end of the government lockdown.
Furthermore, despite the high resale volumes, we have good resale stock levels on hand at the moment in independent living units, which will underpin sales for the 6 month period to 31 March 2021. Other highlights were bringing our development team back on board in the 6 month period following the lockdowns and ramping up our development activity again. And we remain on track to deliver 2 17 units in care suites in only the 10 month period to 31 March 2021, which is in line with our previous guidance. So we've already completed the 28 apartments and 61 care suites at Green Gables in Nelson. We've got another 35 First Stage Retirement Village Apartments at the Bayview and Tauranga, as well as 22 Apartments and 71 Care Suites to come at Bellevue and Christchurch before the end of March.
And that brings us to a total of the 2 17 units in Care Suite build rate that we are confident of delivering in just a few months. Right now, we have 520 builders, apartments and care suites under construction across 7 projects in 5 geographical locations in New Zealand, and a number of exciting projects have recommenced and new projects commenced during the 6 month period. Our remaining development pipeline of 780 units in Care Suites is 84.2% consented and that demonstrates again great capability of our in house team and getting the design and plan for new projects done, getting consents in place and it provides us with a very clear growth pathway over the coming years. The directors have declared an interim dividend of $0.0103 per share, which is not imputed. The record date for that dividend is 10 February and payment 24 February, and the dividend reinvestment plan will be operating.
We were very pleased with our inaugural domestic retail bond issue on October 2020, where we raised $125,000,000 This has provided us with diversity of funding and tenure, which will help facilitate our future growth plans. And finally, as we've previously advised, we will be changing our balance date to 31 March from 2021, and that aligns our financial year with some of our industry peers. So just a brief update on strategy, and this is a slide that we've presented before. Again, the objective of our brownfields redevelopment strategy is 2 fold. 1st, to optimize returns to bid from our aged care business and second, to achieve site optimization and the best yield of retirement at those sites, effectively operating offering product to our residents that is appropriate for the local markets in which the sites are located.
So in terms of aged care, the brownfields redevelopment cycle involves taking a site that may, for example, be returning 8,000 to 10,000 per bed as a standard room facility and interrupting those earnings as we move through the consenting, constructing and commissioning phase of the new aged care center. In the cases we were hoping to close the old facility entirely, which was the case at Green Gables and Nelson, this would mean that we are generating no earnings from the site at all during the construction phase. Whereas for other sites like Bayview and Taronga, the New Age Care Center has been constructed on previously vacant land without the needing to need to physically reduce the capacity of the existing facility. So while we incur a short term reduction in earnings in the near term, once we've completed and commissioned the new aged care center and sell the new beds as care suites, we're recycling our capital through the AURA model, achieving upfront development margins and establishing long term trial earnings from the deferred management fee generated on the AURA. And that enables us to significantly generate higher earnings per bid from the site than were achievable before it was redeveloped.
And we know from our experience with our ATS center at Eden and Auckland that annual earnings per bid in excess of $20,000 are achievable, which is significantly ahead of average earnings in the aged care sector generally. And again, as we increase our earnings per bid in our aged care segment, our brownfields development strategy also unlocks the prime land on the site to optimize yield through the construction of independent living units and new community facilities for residents. In total, over the past decade, we've completed 582 new independent living units. We have 305 in the construction right now and have consent in place for a further 635 on our existing sites. So now just a brief update on developments.
And as I've already mentioned, we're well on track with our target build rates. And we've certainly proven a genuine track record in doing so and meeting those build rates over the past three and a half years. As I already mentioned, we completed Green Gables during the period, and that's selling well with 18 apartments and 9 care suites already sold or under application. We're well on track to complete stage 2 of the Bayview, the first phase of that, comprising 35 apartments in the Bellevue and Christchurch. And that brings our build rate to 217 units in care suites.
During the interim period, we also commenced the development of our Greenfield site at Waimori Street, comprising 79 apartments and 31 care suites and also the final stage of fillers at Graceland's in Hastings, which comprises 18 units. As well as those two projects, we expect to complete the extension to our Eden site in Auckland early next year, next financial year, which is another 49 apartments. We're continuing with the construction of Lady Ellum in Auckland, the next phase of Stage 2 at the Bayview in Tauranga and then finally Hamilton, another 63 apartments there. So there were 5 20 units in Q3 under construction, as I mentioned, and that represents a substantial development program, all managed by our in house team. We're also continuing to prepare for new projects as we roll through the pipeline with new resource consents obtained in Rangiora, and as I mentioned, 84% of the pipeline now under construction sorry, under consent.
Just going through some nice photos. Green Gables is now complete. As you can see in the photo here, the top floor does have a view out to the sea. And we completed that around end of September and recorded some good sales data across apartments and the care center is filling well. Waimuri Street in Auckland is our Greenfields development site.
We acquired in 2018. It's 15,500 square meters in a prime area of St. Helios with wide sweeping views over the harbor and back towards the city. Construction has commenced. As I mentioned, we're over halfway through our earthworks in this project, and we expect to complete this development in one stage by the end of the 2023 financial year.
And this will be one of the highest quality retirement villages in New Zealand offering a full continuum of care to a very high specification. And as we've emphasized on other presentations, St. Helios is an area of Auckland with a high median house price, high demand for aged care and retirement village living and limited competition. So we are pretty excited to commence that project. With AV and Taronga, you can see from the photo here, the first phase of the first retirement village stage, comprising 35 apartments is well on track to complete before the end of March.
And it's a good example of site optimization that I was talking about before, where you can see in the background to the photo, the New Age Care Center, which is now completely full, the new apartments to the foreground and the more primary of the site with the greater views. And then if you look at the top right of that photo, you can see other land with some older units on it that will be demolished and rebuilt for the remaining stages of our retirement village build out on that site. The Bellevue and Christchurch, again, you can see from the photo is substantially complete and certainly we'll have residents moving in by the end of March. Again, it's in a high value area of Christchurch with good demand for aged care. And I've mentioned Eden and Auckland, extension to our existing site.
You can see again, it's progressing very well with the roof going on. We've got a new community center and 49 apartments to add to our existing village there. And again, we expect to complete that pretty early on in the 2022 financial year. So finally, just to reiterate, as we progress through the execution of our strategy and redevelop our sites, we are substantially increasing the proportion of premium retirement village units and care suites across the portfolio. At the time of the IPO, as you can see on the left hand side, 29% of our units in premium were classified as premium, which would include care suites and rooms to which we attributed daily premium accommodation charge to.
Over the past 3 years, we've increased that proportion to 46%, which is your middle stack. And as we build out the remainder of our pipeline, that proportion will increase to 69%, which is our seventy-thirty mix I mentioned before. Now in summary, our long term strategy is to reposition our portfolio, ensure we have the right mix of product in the right locations in order to meet the demands of the local market. This will deliver the highest earnings per bid in the sector as well as substantial growth in our annuity earnings and underlying asset value. So that's all for me.
I'm now going to hand over the presentation to Brent, our CFO, who will cover the financial results in more detail.
Thanks, Earl. Good morning, everyone. Welcome back from holidays. Great to be presenting our half year results for FY 'twenty one. This will be our last time this will be the last time our interims are presented so early in the reporting calendar.
With our move to a full 31 March full year 31 March reporting date. A lot has occurred domestically and globally over the last 12 months with COVID-nineteen largely dominating press headlines. It's certainly being a rewarding time to be on deck and as Ils discussed, our aged care business has turned a corner. We have delivered substantial growth in sales volume with the housing market continuing to defy market commentators. We had some exciting new and new stages of development scheduled for completion in the next 6 months and delighted with the market support from new and existing investors and now an overall $125,000,000 retail bond.
Over the next 9 slides, we'll be covering off an overview of the key financial statements, CBRE valuation, insights and performance of our Keyera and Village segment, sales data and key indicators, our cash performance, growth in total assets and capital structure. There is also further detail on the appendices of our presentation. Turning to the income statement, total comprehensive income of $57,000,000 was up significantly 137% on prior corresponding periods. The material contributors to this positive result were largely reflecting the reversal of COVID-nineteen valuation assumptions contained within 30 November CBRE valuation. This has resulted in favorable fair value movements in both our investment property, IP, and property plant and equipment, PP and E.
There has been a positive change in the fair value of IP, dollars 26,700,000 favorable movement, driven by an improvement in CBRE's operators' interest valuation, which reflects the value of future DMF and resale gain cash flows from the village portfolio. At the time of our full year 'twenty results, CBRE's valuation of IP reflected adverse changes to key assumptions, resulting from a point in time valuation being undertaken with the COVID-nineteen win. As of November 2020, CBRE had reversed either in part or in whole some of these key assumption changes. We've highlighted that for readers on the right hand side of the table. Firstly, property price growth PPGR in year 1 has returned to pre COVID levels of 0%, back up from negative 2%.
Year 2 remains at 0% and this has historically been 1%. And discount rates have reduced by 12.5 basis points across the portfolio, having previously been increased by between 12.5 to 25 basis points across the portfolio in FY 2020. Further supported at the total comprehensive income level by a change in fair value of property, plant and equipment, dollars 31,300,000 favorable movement in fair value of PP and E. Valuation improvements across many of our key care sites, reflecting the reduced discount rates and lift in EBITDA per bed. Turning to the operating revenue of $103,900,000 up 7.6 percent on first half 'twenty, driven by continued growth in our care business as we progress through the premiumization of our care strategy.
Further, we observed a healthy 26% increase in recurring revenue of $18,300,000 for care suite and village deferred management fees. Operating expenses up 7.4% on first half 'twenty, reflecting the continued investment in staffing, patient welfare and COVID response across our facilities. Depreciation expense on buildings up $400,000 PCP, our care suite assets treated as property, plant and equipment and therefore depreciated. We will continue to see growing depreciation expense as we build out our pipeline of premium high value care suites. By comparison, if our depreciation rate were akin to our peers, building depreciation expense would have been circa $1,300,000 lower.
Taxation benefit of 4,400,000. We hold 72,100,000 of tax losses off balance sheet. Each year, we recognize a portion of these losses as a deferred tax benefit to offset any tax expense, mainly relating to fee value movements of our property activities. Moving to underlying earnings. This slide provides a reconciliation of reported net profit after tax to underlying impact and underlying EBITDA, both of which are non GAAP measures.
These measures are important to us as they remove the fair value movement and capture the actual realized gains achieved on resales and realized development margin on new sales at our site. Underlying EBITDA was slightly up on first half twenty at $35,400,000 This result saw good levels of new sales and resales despite operating in a COVID-nineteen environment, particularly at the start of the period when Auckland experienced further alert level 3 lockdown for circa 3 wins. Underlying impact of $23,300,000 was down 5.8% on CCP. I previously discussed the higher depreciation charge and note the higher interest costs in first half 'twenty one from completed development that we are in the process of selling down. If we turn to retail gains and development margins, retail gains up 2 $100,000 PCP on strong retail volumes across both Village and CareSuite.
Development margin down $1,700,000 New sales volumes increased significantly. However, the first half 'twenty benefited from higher margin sales at Auckland premium sites such as the sand. I'm pleased with the strong levels of sales we are now experiencing and reiterate that the increased regional mix in resales and new sales will be a theme that continues in the second half of this year. Turning to a segmental view on the right hand side. The Aged Care segment underlying EBITDA of $11,000,000 up 15.7 percent reflects the ongoing transformation of our care portfolio toward a greater proportion of premium care beds and a strong performance for the half.
We have traditionally reported the resale and development margin for care suites in the village segment as the Village company is legally the issuer of the ORA contract. We make an adjustment to underlying Care EBITDA on the next slide to illustrate the level of these 2 gains. Our Village segment has continued to see strong growth in DMF, up 21% compounded annual growth rate since first half 'nineteen, as development fell down and resales occur at a higher price point. Overall, first half 'twenty one's underlying EBITDA of $34,700,000 was largely flat. TCP and I'll address this in more detail under the Village segment by 'eighteen.
The other segment includes support office and increased $1,000,000 on first half 'twenty. This includes investment in IT, increased insurance costs, clinical, as well as expenses relating to the new long term incentive plan, which was put in place for senior management in first half 'twenty one, noting that the previous LTIP is less. The Care segment, we have observed strong performance in our Care segment. At the full year 'twenty results in July, we referenced reaching a point of inflection in the progress of our care strategy, whereby the earnings drag from the ramp up of new facilities have peaked, and we expected care operating earnings per bed to continue an upward trajectory from that point on, driven by these premium recurring revenue streams. We continue to see strong evidence of this with key underlying EBITDA increasing 15% in the first half 'twenty one to $11,000,000 EBITDA per bed was up 14%, nearly a $1200 increase per bed, a 9,549 per bed annualized.
This was largely driven by growth in our key ramp up sites being Meadowbank 34, Bayview Sands and Arwatari, which generated a large positive operating EBITDA swing of $2,400,000 relative to BCP, more than offsetting the ramp down costs at future development sites. In addition to the turnaround in operating earnings at these key sites, they also delivered $4,800,000 of development margin in the first half twenty twenty one from strong CareSuite sales. We've not formally changed the presentation of our Care and Village segments in our financial statements. That said, we consider that to get a fuller picture of Care, these margins can be aggregated with the operating Care segment figures given the margins are essentially the quid pro quo from earnings foregone in the decommissioning side. Total aged care underlying EBITDA was up 21.6 was 21,600,000 dollars up 16% on PCP and delivered $18,779,000 underlying EBITDA per year.
Total care underlying EBITDA includes CareSuite development margin and retail gains of 10,600,000 dollars in first half 'twenty one. These are primarily related to the Sands, Meadowbank 4, Arwuthiri and the Bay Area. Premium revenue, we are continuing to see good growth in recurring premium revenues from PACS and BME and observe a 30% 37% compounded annual growth rate since first half 'nineteen. We expect to see continued strong growth in this area while we continue to build and ramp up our premium care development. Total aged care revenue of $87,300,000 up 7.1 percent, an increase largely driven by premium revenue capture.
Operating costs. Staff costs were the greatest contributor to the first half 'twenty one total expenses of $76,300,000 This included pay increases for registered nurses as part of our ongoing efforts to retain key professional staff. The ramp up of Green Gables, which opened in September, also drove an increase in care operating costs. And in summary, the care portfolio has performed well, PTP, with higher occupancy. We continue to replace the short term earnings impact with longer term quality and quantity of premium units being DMF, pack and resales.
And importantly, we are past the inflection point in the brownfield development of our portfolio. And we will likely see less volatility in our annual care at year end as the maturing and ramp up
prior periods investment take hold.
Village segment has rebounded strongly since COVID-nineteen, underpinned by 44% growth in total sales. Underlying EBITDA of $34,700,000 was flat on first half 'twenty. As with the Care segment, we continue to see strong growth in BMF revenue for the Village segment, delivering a 21% CAGR over the last 2 years, resulting in $12,900,000 of DMF revenues in the first half 'twenty one. Minor cost increases across occupancy and staffing, including costs relating to Green Gables, which as I mentioned over the last year. We have managed to maintain underlying EBITDA in the Village business despite the first half of 'twenty being heavily reliant on super premium sales in our flagship sites, the Sands and Meadowbank, and we have pivoted to higher quality earnings underpinned by recurring BMF.
Total sales were a key feature in the first half 'twenty one. We delivered strong growth in sales volume on first half 'twenty, up 83 total sales to 268. This was underpinned by new sales and resales of key suites, which grew 36 percent to 159. Total new sales of resales of apartments and villas also experienced strong growth, increasing 60% to 109. We provide further detail on resale and development gains based on the 2 slides.
By looking at the resale volumes, total resales of 123 for the half year was up 22% on PTP. A significant portion of the increase driven by CareSuite retails as our Care portfolio grows and matures. We've seen a solid sales recovery from COVID-nineteen as depicted in the second half twenty twenty graphic. Importantly, we've also recorded increased retail across all product types, villa, apartment and key suite compared to first half twenty twenty. We are pleased with the retail selling volumes, which we have achieved across the country, not just in Auckland.
On a prices basis, retail prices continue to grow across Village and Care Suites in first half 'twenty one. Apartment resale prices as an average decreased slightly PCP due to the regional mix of apartment resales versus the PCP and the second half 'twenty's year waiting towards Auckland based resales. Resales margins of both ILUs and Care Suites improved on second half 'twenty, which was heavily impacted by COVID. As was previously foreshadowed, ILU retail margins have and will continue to moderate down from earlier levels of around 30% as more of the portfolio moves from key new and urban locations to core urban regional locations. From a closing stock perspective, at full year 'twenty full year results, we in July, we noted the high levels of retail stock that was sitting on at the time resulting from COVID-nineteen, hindering sales at the end of that financial year.
As emphasized at the time, this was a good signal for retail momentum in FY 'twenty one and our strong retail volumes and gains in first half 'twenty one improvement. Despite strong growth in retail volumes in first half 'twenty one, we still have good levels of retail stock on hand presently with a higher mix of ILUs versus key suite relative full year 'twenty. This is a positive indicator for resales, both volumes and margins over the next reporting period. If we turn to development, new sales volumes as covered earlier, Oceania recorded 145 new sales in first half 'twenty one, a 73% increase or 61 sales on first half 'twenty. Within the development sales volume, CareSuite volumes increased to 85 new sales, further illustrating this model is well established and accepted by residents wanting the convenience of a larger one equipped room, the additional services and confidence of care in a single move to meet their future needs.
ILU and villa development sales volumes doubled on PTP, reflecting the sell down of Green Gables as well as sales of new villas at Cityanga and Woodland completed in late full year 'twenty. Development margin, there was a softening of development margin percentage in first half 'twenty one relative to first half 'twenty. As we indicated previously, we expect the development margin to moderate in the near term as we move our mix away from recent premium Auckland development for those in more regional locations. Continued strong apartment sales achieved at Meadowbank and Sands offset by lower price point offering and maintenance. From a cash flow perspective, strong operating cash flows of $74,600,000 including first time sale receipts at development sites of 65,900,000 dollars Payments to employees and suppliers down $5,400,000 Receipts from new ORA contracts up $11,400,000 from first half 'twenty to $113,400,000 dollars Total CapEx of $60,100,000 Development capital expenditure is about $10,000,000 lower on a PCP as a result of re ramping up on development sites post COVID-nineteen.
Development activity has since returned to pre COVID levels with a number of quality sites as was presented earlier coming on stream by full year March 'twenty one. Also, CapEx includes a small CapEx includes a small acquisition of an adjacent site in Christchurch. Pleasingly, during the period, we generated circa $15,000,000 of excess cash sale proceeds relative to development CapEx incurred. A reconciliation of more receipts and payments including buybacks for development is provided in the appendices. The balance sheet.
Total assets increased by $177,000,000 to 1,700,000,000 dollars The circa $120,000,000 increase in full year 'twenty was driven largely by capital expenditure, which was around $60,000,000 and CBRE valuation revaluation movements of $57,900,000 across both IP and PP and E. Our net adjusted value net per share, which is a non GAAP measure, at 30 November 'twenty was 1.24 dollars per share. This is a strong increase from the $1.10 per share at full year 'twenty, again driven largely by the revaluation uplift in IP and PP and E coming from the aforementioned changes to CBRE's assumption. As such as an equity valuation, it strips out the value of refundable payments being $97,000,000 for CareSuite and $470,000,000 for IOU. It's important to note our IP and PP and E balance sheet values already include a CBRE valuation discount on the unsold stock.
The first half 'twenty one, this was a blended discount of 25%, down from 27 point 3% at full year 'twenty and equates to around $35,000,000 of additional value or $0.055 per share. As we continue to sell this down, we expect to realize the severe value gain. Gain. NAV is a proxy for valuation of the status quo of the existing. It excludes the $0.055 per share referred to and importantly the incremental development cash flow and earnings including retail gains and DMF from the 520 units and suites under construction as of 30 November 2020.
Capital structure. Our net debt at 30 November 2020 was 311,400,000 with gearing at 32.3 percent, down from 35.1% at full year 'twenty as we have reduced unsold stock value and experienced fair value gains in our property portfolio. That includes $125,000,000 from our inaugural 7 year retail bond issue, which was successfully completed in October 'twenty, achieving the full oversubscription of $50,000,000 dollars This issuance extends our TENA and provides diversity of funding sources. Facility C, which was secured from Oceania Banking Syndicate in April 'twenty to provide 70,000,000 of additional liquidity amongst the uncertainty of COVID-nineteen was undrawn and canceled on full upon the issue of the retail bond. The net impact of the bond issue on total facility limits was therefore a $55,000,000 increase to $475,000,000 We have $299,700,000 net bank debt drawn as of 30 November 'twenty, providing $175,300,000 of headroom in our banking facility.
We have sufficient bank facilities in place to execute our development pipeline with the ability to switch funds between facilities. We also note the addition of a debt profile graphic. So that's it from me. Thank you, everyone. That concludes the financial update.
We are now open for questions.
Well, thank We'll take our first question in the queue at this time. Please go ahead.
Hello.
Hi, good morning. It's Bianca from UBS. So my first question is around Hi, good morning. Hi. So my first question is around Care.
So obviously, great to see the growth in Care EBITDA after a few periods of negative growth. So do you expect it to really be an inflection point here? And can we sort of expect it to increase further going forward? Or can we expect some more periods with some more pressure on care EBITDA?
I think as Brent said in his part that we've certainly passed that point and we expect more linear growth profile going forward. So as we continue to sell down our developments that we've completed over the last few years, there are some that we've supported the market
in the last few months. We'll continue to
build that premium revenue stream. We would expect to see care earnings continue on the upward trajectory from here on.
Okay. And then also on the CareSuite new sales, what percentage there was RA sales and what percentage that you have to sell as a premium accommodation charge there?
So all of the sales are actually new orders that we don't recognize I have premium combination room as a sale per se. So the unit sales volumes that you're referring
to are all peer suite sales under orders.
Right. But like from the new developed CareSuites in the last half, did you have to sell any as a peg bed? Or did you manage to sell them out all as an Oura?
So the 9 sales are featured at Green Gables, for example, our sales of auras.
Yes. Okay. All right. And then just a bit on unit price inflation. Obviously, you've seen very strong HPI around the country recently.
Have you started pushing some of this through in the unit prices? Or have you kept unit prices reasonably flat?
We're pretty dynamic in our pricing strategy, Ben, because we don't necessarily go across the country and say there's been an extra bit increase in house prices in this part of the country, so push unit prices. But we're pretty dynamic in terms of when a unit comes up for resale in particular to look at what the local median house prices and benchmark our sale prices against that. So prices have increased, as you've seen from Brent's presentation. But it is heavily the averages we've given in the presentation are heavily influenced by mix. So the pricing outside of Woodfin obviously within Auckland is totally dependent on where the sorry, the averages that we give you is totally dependent on
where the stock actually is at the time. Okay.
And then last question from me. Could you give an indication on some demand in more recent months?
Demand in more recent months. Well, everyone certainly, it sounds like had a good holiday. So I think everybody closed for Christmas pretty early. But I will say that we've had a significant increase in inquiry levels over the last week. So volumes leading into sort of November, December were very high.
And it obviously came off, we had a good break. We're well deserved 1. And we've seen that ramp up again in the last week. So back to those sort of levels that we were experiencing pre Christmas.
I think in addition to that Bianca, obviously, there are new products that are coming on stream in this forward period, which we touched on earlier, particularly as it relates to the Bellevue and Christchurch in Bayview Apartments in Taronga. And in addition to that, we obviously sold well through our unsold stock, but we're sitting on some quite attractive closing stock that we intend to make.
Yes. Okay. Okay, great. That's all for me. Thank you.
Thank you.
We'll move and take the next question in the queue. Please go ahead.
Hi there. Good morning. This is Aaron from Foresight Bar. I have a couple of questions, maybe slightly off what you're focused on. But my first question is just in relation to construction activity and access to finishing products and to some degree also to skilled labor.
We've heard about sort of pockets of shortages here and there and just wanted to know if you could comment around that and see if you had any concerns with your ability to complete developments over the next 6 to 9 months or so?
Yes, good question, Aaron. I mean, particularly we contract as you know, we upsource our actual construction activity. And that we deliberately sort of choose our construction partners in that sort of mid level, mid tier range of construction operators. So Watson Hughes, for example, are gone with building 1, Murray, just built other MetaBank, etcetera. So we're dealing with long term established construction partners and haven't experienced any labor issues to date with it.
In terms of materials, similarly haven't experienced anything to date. I would say that of the projects we've got underway right now, we are nearing completion of the Bayview and the Belleview and Eden. So and Waimea is an earthworks, so we're not necessarily sourcing a lot of steel or something, for example, at the moment. So that may be a hit. It's certainly something we'll keep a watch on, but short answer is we're not experiencing any of those impacts today.
Okay. Thank you. And secondly, just on operating expenses and more specifically on staff costs, I guess. So we've had sort of excess costs reported by a couple of operators in relation to COVID, sort of ongoing through some of these restrictions even after the worst couple of months in March, April. And then we also have this sort of, as you mentioned, repricing or reset, as you called it, of nurse salaries in particular.
So looking ahead, how should we think about costs going forward? Do you feel that what we've seen in the numbers is a fair base level? Or is there any excess costs in there? And when it comes to the sort of staff costs generally, have you reset it now, so we should expect traditional inflation going forward?
Yes. I was just going to say, I would certainly expect sort of inflationary levels of cost pressures to continue. In terms of nurse wages in particular, we've reset ours at pretty much the highest in the sector. Retaining staff is not just about wages and career pathways and professional development opportunities are important. So we're focusing on those initiatives as well.
I would see towards further cost increases being offset by funding increases, particularly in aged care. So there is, as you may have seen, a significant lobbying effort for pay parity of aged care nurses. And the Edison report did refer to that and support it. So we would expect that to be resolved in the government budget for this year, this calendar year, so an increase specifically for nurses. And the final round of pay equity adjustments for healthcare assistance is due this year.
And again, that will provide a sort of one off base that be matched by funding. So again, short answer, yes, I would expect it to revert to inflationary levels and further cost pressures, particularly for nurse rate, wage rate adjustments and healthcare assistant pay equity to be offset by funding, which has been well managed by the by Treasury and the sector negotiators. In addition to that, Aaron, I'll
just make the comment that all operators probably including ourselves continue to invest in patient welfare and particularly COVID. It's not a material part, which is why we've not pulled it out separately in our results. But it is just the extra diligence that we and other operators are taking in the sector. So clearly there is ongoing pressure around some of the supplies of those patient welfare materials and we're just continuing to manage that.
Okay. Thank you. One question on the results. Just on you obviously had a very strong result. And if I look at new sales, they were strong and margins were certainly slightly higher than guided for.
But if I look at the actual price achieved on the Care Suites, I think you put into 27 or something in the report for the first half twenty twenty one. I was just wondering the sort of absolute number here. Is should we expect that to hover around this level in the low 200s? Or do you expect that to change up or down going forward just as a forward indicator of DMF, I'm thinking here, rather than your margins per se?
So the new prices, in terms of prices
in the near suite side? Yes. New price for CareSuite. Yes.
The higher prices are definitely being generated out of the sands in MetaBank. We still have stock at Metabank. We have no stock at the Bayview of Tauranga and we are well through our southbound of Hamilton. So I would expect to see on an average level that to sort of moderate down, but that will then turn into resales. And as you know that the average tenure in CareSuite is relatively short.
So your resale margins and resale volumes will continue to rise and CareSuites has been a lot much higher total volume of them in the portfolio.
Okay. Final question for me. Have you heard anything about this white paper? Or is it sort of dead on arrival?
Dead on arrival. Yes, look, it's out for consultation now, Aaron. That's due by the end of the month. We'll be in a commission and certainly the Retirement Villages Association will. It's been put out by Jane Wrightson as the new Retirement Commissioner, heavily influenced by feedback from recent lobby groups.
But I mean, in short, there are certainly adjustments that can be made to the framework, which would enhance the recent voice, so to speak. And that's in relation to the organization of regional committees and the interaction with operators generally. And secondly, through the complaints process. It's obviously the larger operators are not really prone to that because it's obviously in our interest and to keep residents' satisfaction levels high as they are and to deal with issues quickly as they arise. The noise really comes from smaller operators in some of these issues.
The more fundamental sort of questions around the business model in terms of sharing of capital gains and compulsory buybacks, I don't think will progress simply because it's fundamental to the New Zealand retirement village sector. And sharing of capital gains would take us back 12 years to win. There were issues at every resale around who pays for the refurbishment and what level of refurbishment there is. I mean, that's what the adjustments to the coming back being resolved and they will well accept it. And I think the thing I'll leave you with Aaron is that the retirement village sector generally has the highest customer satisfaction rating of just about any industry in New Zealand.
Okay. Thank you.
And next we'll take the next question in the queue.
Yes. Good morning, guys. Hope you can hear me. Stephen Mitchell from Craig's here. Just first question on kind of thinking around development margin long run.
There's been a bit of discussion about it earlier in the call. But I guess the previous kind of guide was to consider 20% developed margins long run once we got through the sands of Meadowbank. And obviously, you're progressing very well there and the mix changed to more regional sites. Is that still how we should think about can develop margins medium term or given the recent step up in the drilling house prices and perhaps a little bit untapped upside in your own developments. Should we be perhaps re incurring to maybe something like the mid-20s?
Just interested in your thoughts around what you can see on the debt margins going forward?
Yes, I think that's a good question, Stephen. It's Brent here. I think what we've guided the market to in the long term is correct. So we see things as we move, I guess, Auckland South sort of moderating over time and into those kind of 20. I do think that we've all been caught somewhat surprised by just buoyancy of the housing market.
So that probably allows for some of that dynamic pricing to come through, which won't be reflected in the comment that I just made. We don't know the duration of it and we don't know the strength of that, but that obviously provides a bit of a shield for potentially higher development margins. But I think what we have guided to was correct. It's the mix change, it's product mix changes and as we move regionally, then we end up with kind of a blended development margin as we've guided with some upside as pricing metrics in the housing market continues to be as buoyant as
it's been in this last period.
Yes. That's helpful. And then just on the balance sheet, I mean, it's strong cash flow result and carrying well under control. Can you talk a little bit to the dollar value of the company's capacity to make acquisitions. And potentially, the gearing ratio, you might be happy to kind of go to at least in the short term if the company was to make an acquisition.
Yes. Well, I think we always have an inquisitive eye. We think that the sector naturally will consolidate in time. It has been very important for us to demonstrate to the market that we can bring prudent gearing, particularly with the uncertainty of what's existed on the global stage around COVID. So we're pleased to have taken a couple of basis points off our gearing from the full year.
But yes, there's certainly capacity there. Acquisition for us has to be well accepted by the market and as such, we're not looking to do anything heroic. We are looking for things that are on strategy. We're looking for opportunities that are going to add value to our shareholders in this next phase. But inevitably, there will be some sector consolidation opportunities.
As we know, the segment is very hard, it's very complex, it's got operational challenges and regulatory challenges and that naturally gravitates towards genuine acquisition opportunities for us.
Okay. Makes sense. And then just in terms of site acquisitions, or organic growth, to what extent does the company come looking at other sites like Wainwright Street? Are those sorts of acquisitions under active consideration? Or is the focus still on building up the Brownfields portfolio?
I think it's 2 fold, Stephen. We've mentioned before the we've got enough land to keep us busy, but we all know there's a runway that has an ending in the time from identifying site acquisition, consenting, building consenting construction can be 3 to 4 years. So we are certainly looking at sites now actively. We have a few regions of the country and I would fully expect to be making an acquisition of some sort over the next few months.
That's helpful.
Thank you. And last one for me. Just with the move to the March balance date, I'm just wondering if you can give us any sense of the kind of the seasonality. I mean, I think Bill, in response to an earlier question, obviously, there's a quite a period over December, January. But I guess we haven't got historic on historical trading for the kind of 4 month period.
So just wondering if there's anything you can indicate over what the comparable might look like for the 4 months to March, either in terms of earnings or the sales volumes or any kind of metrics you could give us just ahead of the actual results, which we'll be looking forward to in May?
Yes, I think that's
a testament point that you're raising, Stephen. I think from our perspective, we appreciate that moving to a March period means that we probably end up with a traditionally a stronger first half against that means from the second half because of the December, January impact with 6 weeks, 8 weeks, etcetera. Having said that, the property market is defying logic and as a consequence of that, we've seen tremendous velocity in sales and obviously some improvement in pricing. But I think your point is right. Moving forward from here, we're putting ourselves on a similar timetable to our peers.
And if they think about their seasonality and our seasonality, it's pretty similar. So we are going to have that kind of softer window through December, January just as the nature of our calendar year and the summer season.
So I think, Stephen, if you certainly, it's not just a matter of cutting out through to us
of the year. I think that's a short
Yes. Okay. Thanks very much. That's all for me.
We'll take our next question. Please go ahead.
Hey, it's Nick from Macquarie here. Most of the questions have been asked. Just on the dividends, could you just talk through the thinking of the kind of payout ratio for the first half and just confirm the kind of full year intention in terms of the traditional payout ratio?
I mean, obviously, dividend is a benefit board, Mick, but there's no intention to change the payout ratio. And really, I think the dividend that was declared this year this interim period is a reflection of ongoing caution, the growth in the business, the opportunity to reinvest the capital, but obviously rewarding shareholders for staying with us through the period. But yes, as I said, I think the key takeaway is that there's no intention to change the payout ratio. And the full year result was just a few months away.
That's great. And then just kind of formally kind of commenting on your thoughts around Ryman's kind of care payment model that they've proposed in a trialing and any observations you've made around that?
Yes. Well, I mean, I think as we've said before, Nick, that's a matter for Ryman. We have our care suite model during the deferred management fee, which obviously provides greater economic returns. I think there are some challenges to the RAD model and the fact that it gives residents the opportunity to switch out of from capital deposit to the premium accommodation charges, which can sort of cause a drain on cash flow. I think one thing I'd really emphasize is that our key suites, particularly our larger key suites, do not compete with the Ryman HQ room or any other operators' HQ room.
The larger care suites are 36 square meters. They're more akin to a service department. So even our smaller care suites, our 22 square meter care suites have kitchenettes. They might be more the size of standard care room, but even those rooms are more highly specked than most of the competition. So certainly from a competitive perspective, it does not concern us one And rolling back the clock of the regulatory model in New Zealand was red and deaf, but I'd certainly welcomed it 6 years ago when I joined Asciania.
So it's a far better funding model than what we had. The fact that we're doing care suites, the fact that all operators building new bids are premium bids is a reflection of the chronic problems with the government funding model. And the fact that operators have taken the economics into their own hands and residents out there are wanting premium rooms, we wouldn't be building them if there was no demand for them. So, yes, look at as I said, it's somewhat a reflection of Ryman's own position in the growth cycle. And from a competitive cycle, that's effective.
They haven't actually rolled it out. We don't know what the pricing looks like or anything like that of the reds, but we're not we're certainly not concerned. Aged care doesn't only competes when you're in the same geographical location. We've got profits in New Zealand where the Ryman facility is close enough to be competitive. But to a large extent, we're not we're offering quite a different product in terms of the size of the rooms and the specification of the key seats.
I think in addition to that, Nick, I'll just comment that the RAD model in particular created some significant challenges in the Australian market. So it's going to need to be carefully thought against that backdrop. And clearly, as you'll see, that creates a current liability. So if you're a model which you're highly leveraged to development and highly leveraged as it relates to capital structure, you're potentially crystallizing a very real current liability. And so that needs to be carefully managed.
And the other observation I'd make is that generally the implementation of a RAD model has pushed price up. So people have thought about the economics of using that resident payment and it's often had a direct correlation to sort of a movement in price up as it relates to that particular product.
No, that's great. That's very comprehensive. Thanks a lot.
We have no further questions in our queue at this time. It appears we have no further questions in our queue at this time.
Okay. Thanks everyone. We'll be speaking to you again at the end of May. I look forward to catching up with some of you over the next week.
Thanks everyone.
Everyone, that does conclude our conference call for today. We do thank everyone for your participation. You may now disconnect.