Good morning, everyone, and welcome to Ryman Healthcare's full year results presentation. My name is David Kerr, and sitting beside me is Gordie MacLeod, our Chief Executive and then beyond him, of course, David Bennett, our Chief Financial Officer. So thank you to everyone who's made it along this morning. It's a special morning actually this morning because we've been joined by Kevin and Joe Hickman. So Kevin was a cofounder of the company and recently retired as a Director.
And critically, what Kev did was he set this ship on its course. He established those core values, which have been with us for thirty something years. And he has enabled us to operate in the way that we have, constantly focusing on those values. So Kev, you'll be pleased to hear that things are unchanged. They're still firmly in our DNA, those original values.
Also joined by Geoff Cumming. So Geoff, welcome. And Geoff is a Director of Ryman, has been for a little over a year. And Geoff has been a long term investor in the company and has had a long term interest in how we go. And in fact, he rejoined the Board, having been on the Board just immediately after the IPO, so that's just on twenty years ago.
And he's really proven to be of a great value in his role as a Director. And finally, I should just acknowledge Andrew Clements. Clements, great to see you also. Clements has been a Director for probably a decade and has had an active interest and active result in terms of molding the company into what it is. So welcome, everybody, but welcome specifically to those three.
So this morning's format includes an overview from myself, followed by presentations from firstly Gordie and then from David. I'm going to talk about the investments we've made in our residents, our team and striving for clinical excellence. Gordie will then talk about the operational highlights and about the momentum that we're gaining in Victoria and in New Zealand. David will then give you some greater detail on the financial results. At the end of the presentation, we anticipate opening the session up for questions from the floor.
Then following that, we'll take questions from any callers who are on the conference call line. At that time, we'll bring you around a microphone for any questions in the room so that you're easily heard. It's also important that people on the webcast can hear you clearly. So for those of you listening on the phone or on the phone conference, the operator will advise you when you can ask a question, and we anticipate wrapping up in around an hour's time. So our results today reflect a solid year given the current trading environment, which has included some challenging market conditions.
The headline numbers were that the audited underlying profit rose 11.5% to $227,000,000 The reported or IFRS profit, which includes, of course, the unrealized valuations declined 16% to $326,000,000 The 2018 full year result was boosted by changes to the independent valuation assumptions, but there were no significant changes to the assumptions in the twenty nineteen year. Full year dividend has been lifted to zero two two seven dollars per share, in line with the growth in the underlying profit. Payment will be on June 21 with a record date of June 7. Our net assets have reached $2,170,000,000 up from $1,940,000,000 And importantly, our operating cash flows rose 15% to $401,400,000 with cash receipts from residents exceeding $1,000,000,000 for the first time. This has allowed us to invest a record $552,000,000 in new and existing villages during the year, up from an investment last year of $478,000,000 Our underlying profit of $227,000,000 reflects how the company has actually been trading and is used to determine the dividend.
The result came within the $223,000,000 to $238,000,000 range that we set at the half year result briefing and so is in line with the market consensus. Our medium term target continues to be a doubling of our profit every five years. This, of course, translates to our increasing the underlying profit by approximately 15% each year over the medium term. We fell short of this for two reasons. Firstly, we took some longer term strategic decisions to reinvest in the business, which we believe will help the performance in coming years.
Secondly, resale volumes were flat. As you know, it's hard to predict the number of resales we get in the short term, but we'd expect volumes to grow in the medium term with the portfolio's growth. As a company, we're very focused on growth but not interested in compromising on our core values of ensuring that resident care has absolute primacy. We think it's a solid result given the decline in the Melbourne housing market and a cooling off in New Zealand market, particularly here in Auckland. Despite these developments, our villages remained in demand during the year.
Occupancy at our established care centers was at 97%. While the resales were flat, we sold almost all our stock that came up, which we take as a positive sign that our villagers are hitting the mark. As at March 31, we had only 1% of our resale stock unsold. Our build rate during the year lifted by 42%, and we have 20 new villages either in development or in our land bank, which gives us a great platform for growth in the years ahead. Ryman's a company with a wonderful purpose, to care for older people.
We build and operate vibrant retirement communities with excellent care available. The care we provide, in Kevin's words, has to be good enough for mom. We've been doing this now for thirty five years, and we have a sustainable business model that is highly efficient at recycling capital so that we can continue to build and grow. Our villages are built to be sustainable. We are the long term owners, so we ensure they're built to the highest standards.
Our villages are an extraordinarily efficient use of land when you compare that to a conventional subdivision. We've got a program of work to make them even more environmentally sustainable. We've measured our carbon footprint and we're working on ways to reduce our impact by saving on energy consumption and waste within each village. We'll be trialing solar powered townhouses, and we've installed an electric car charging network here in Auckland. We've introduced electric cars into our fleet.
We're currently trialing a pilot e cab service and a car sharing service at three villages using low emission vehicles. This means our residents will have access to our own version of an Uber service with the driver and car at their disposal for appointments. The car share service means each village will also have a car available for residents' day trips. At a point when loneliness is being described as the world's next epidemic, we think our villages are a great antidote. Our team does its best to make them as vibrant as possible with great food, exercise, classes and a wide range of social activities.
We think it's hard to be lonely if you're surrounded by a caring, like minded community and an array of activities to choose from. It's our mission to bring as many Ryman villages as we can to as many places in New Zealand and Victoria. To do this, we need to be profitable, and we believe that both purpose and profits are good companions to each other. Our most critical asset is, of course, our people. So you'll be pleased to hear that we've invested heavily in our team.
During the year, we took a strategic decision to act quickly on registered nurse pay in New Zealand to ensure that we were ahead of the rest of the industry. So we immediately matched the pay rates being offered to DHB nurses. That decision, which was worth $5,000,000 a year, has kept us ahead of the curve. And I believe, as a result, we have an extremely loyal team. We've taken the decision to increase pay again across the board.
And from July, the minimum adult hourly rate at our New Zealand villages will lift to $20 per hour. We've also invested in developing our people. We're establishing the Ryman Academy to develop our staff in conjunction with a number of excellent education providers, including the Melbourne Business School, who will provide world class development courses and support for our senior leaders. We're also working with other training establishments and universities to provide additional courses for other members of the team. Our lead energize and perform or LEAP leadership program is now well into a second year, and two eighty of our leaders have been participating.
We've refined and developed the course and are launching LEAP two point zero. Initiatives such as the LEAP program and the Ryman Academy recognize that there's more than just pay to work, and we know our team want to build their careers and gain expertise with us. Our programs are all built around coaching, mentoring and problem solving in the workplace. People learn by doing. It's a bit like swimming.
You cannot learn from a book, you've got to get in the water. Having a career path at a company with purpose and a strong future makes for a highly engaged workforce. And our latest team survey showed engagement at a record level for us. Our aim is to be the employer of choice in a competitive market. And clearly, our residents will continue to benefit for being cared for by professional, stable, engaged and well prepared and trained teams.
We think the world of our team and so do our residents, and we will continue to invest in them. It would not be a success without those highly engaged teams, so we're delighted to learn recently that we've been named the most trusted brand in the aged care and retirement sector for the fifth time. We've won it five out of the six years that it's been made in New Zealand. Then last week, MyRaiman won a Best Innovation Award at the Asia Pacific Elder Care Innovation Awards in Singapore. We've talked about MyRaiman before with you, and MyoRaiman has been a significant investment.
So it was great to get international recognition for the work. Our pursuit of clinical excellence has continued. We've added a Medications Advisory Committee, which includes respected geriatricians, a specialist pharmacist and a Health Quality and Safety Commission representative. The aim of this is to better understand how medications are affecting the people they're meant to help and to make sure the medications are appropriate. We've also taken on a specialist medical researcher to analyze the data that we gather at MyRaiman.
It's proven to be a treasure trove of insights into the health challenges that our older residents experience, effectively closing the loop between the visiting doctors and the health outcomes that everybody seeks. We couldn't have done that without MyRaiman. Significant project during the year involved a refresh of our approach to dementia care. We've been providing dementia care for over twenty years, and it is a cornerstone of our care offering. We currently have eight forty dementia beds and have six sixty more in the build program.
We'll be rolling out a program called MyRhyme and Life, which is a new approach to dementia care during this coming year. The approach supports the person suffering from dementia to be happy in the moment, in the best environment possible. We've also introduced our first telehealth clinics during the year, which use technology to connect our clinical teams across the Ryman villages so that specialist advice is more easily obtained. The wide range of investments that we've made over the past five years in clinical improvements and from the introduction of MyRyman are really delivering results. In July 2017, we had 11 villages with four year certification from the Ministry of Health.
As of today, we have 25 villages with four year certification, and this is generally regarded as the gold standard in quality measurement. In fact, Logan Campbell, which is our latest fully operational village here in Auckland, received four year certification in its very first order. Normally, villages are given shorter terms so that the auditors can see how things bid in. We think that's an extraordinary achievement. So I've talked a lot about clinical innovation, which is always a focus, but I think it's important to note that we also are putting a lot of effort into lifting the bar for the independent residents.
We have more than 7,500 independent residents, and our operations team has been busy working on a number of initiatives and enhancing their quality of life. So we call this Ryman Delight. For many of our residents, cooking has become a bit of a chore. So we've taken our Project Delicious recipes, turned them into ready to eat meals for independent residents. They can buy them from us, heat them and eat them at home, taking the pain out of cooking.
We've introduced a new hosting service aimed at making their village centers more of a destination in the evenings. Residents, their families and friends can enjoy bar snacks and drink with their friends in our village lounge. Our residents love films. We thought we could make more of the movie theaters, so we've introduced new films and later session times so they can enjoy a night at the movies after meeting for a drink and something to eat. Number of years ago, we introduced a Ryman benefits card, which provides discounts for our team with more than 50 of our various suppliers.
We think our residents should be able to share the benefits as well, and we'll be providing benefits cards for them with similar discounts. Cards mean that the residents and team can make the most of our buying power and our suppliers are more than happy to be part of the Ryman community. Keeping our existing villages up to date is and in great condition is a further area of investment during the year. We have 36 villages in operation now, and that's a large scale property portfolio to care for. We've got a team of specialists dedicated to looking after our existing facilities management and refurbishment program.
It's important we meet our promise at all the sites. And I recently visited Woodcote Village in Christchurch, one of Kyiv's very first villages, and also the Rowena Jackson Village in Invercargill. And I was really delighted to see each of them was in great shape, strong occupancy and that they were villages of which we can continue to feel proud. So momentum that the company has built up is very significant. We've talked about five villages open in Victoria by the end of twenty twenty, and that target continues to be realistic.
We acquired six sites during the year, including three in Victoria, where we now have a total of 10 sites. This moment, we have either we have 20 sites under construction or in the planning and design stages. And Gordie is going talk you through those in just a moment. Finally, you're all aware of the demographics that provide the backdrop for our growth plans. So this first slide shows you the current demographics, which have driven our growth to date.
The second slide shows the growth over the next thirty years. These demographics underpin everything we do. We listed on the NZX almost twenty years ago, knowing the potential of these demographics. It's now my pleasure to hand over to Gordie to talk to you in more detail. Thank you.
Well, good morning, everybody. Thanks, David. Nice to see so many faces here, and there's lots of people watching online as well. Think there's all the people back in the office and around the country. I just want to say hi to everybody.
David spoke about MyRyman earlier, and I just wanted to acknowledge the huge amount of work that my predecessor, Simon Shelley, has put into MyRyman. It's he he put countless hours onto it, and it was a real labor of love for him. And so I'm I'm delighted that it's been such a great tool for us and, of course, a huge team effort over the last sort of two or three years to actually make it operational. Most IT rollouts fail pretty quickly and decided to deploy thousands of surface devices to aged care rooms around New Zealand and Australia and for the whole infrastructure to work really well, and most importantly, for our clinicians and caregivers and nurses and residents to get the best out of it, I think it's a wonderful achievement for the whole team. So I just wanted to acknowledge that upfront.
So David has outlined some pretty remarkable achievements during the year from the team. And it's pretty humbling actually because you review the things that are going on, and you're very aware that all of the efforts that people make are huge personal efforts on behalf of us and our residents. And I'm also incredibly excited about what lies ahead and how we're going to grow. So we've gathered a huge amount of momentum in our build rates, and that lifted 42% during the year to seven fifty seven beds and units. And I think that those of you who read the paper will know that, that means that we beat Kiwi Build.
So anyway, I didn't really say that. So all going well with consents and development applications. We're expecting to have work underway on 12 sites in the coming year, and we're about to move into our biggest ever build program. Our land bank now totals more than 7,000 beds and units, and 40% of these are consented. This means we have not only got great quality sites, we're getting better at turning them into villages ready for sale to meet the demand ahead.
As David mentioned, we encountered some headwinds during the year. In Melbourne, we've seen the housing market come off about 10% from its highs, and there's been a calling in the wider Auckland market with volumes down 18%. It's probably fair to say that just about every paper you read for the last three sixty five days has had a negative story about the property market printed, though rather repetitive and on both sides of the Tasman. The aged care sector in Australia has come under intense scrutiny from the Royal Commission into Aged Care. We made a submission on behalf of Ryman to the Royal Commission on ways that we see of improving the system.
And we think that overall, anything that's going to result in better care for older people and the way it's delivered has got to be a good thing. We opened our second Melbourne village during the year, and it's now home to close to 200 residents in independent living and care. The village was opened a few weeks ago by Lord Samuel Westy, an English peer who was the great grandson of Dame Nelly. And I haven't done very many speeches with Lords. He's a lovely chap, and he took a huge amount of interest in the village and really trying to understand how we worked.
He told us that he'd thought long and hard before lending such a treasured family name to us for the village. And he told me, at the end of the evening that he had talked to about 70 residents and how about how they were finding life in the village. And for those of you who have been to England, there's nothing like this in England. So he was really intrigued. And he couldn't believe how happy everybody was.
And to me, that says it all. And I got the same feedback during the night too. So you know that our success is always going to be defined by whether we make people happy. And it gives me a lot of comfort when you get that on the ground feedback from people that we're doing a good job. What's even better is that the team has already identified things that we could do better.
And of course, you can imagine that our residents have also shared with us ideas about things we could do better, too. You can see from the slides how much progress we've made at Nelly Melba over the past eighteen months. Have a look at this. We'll go back to the beer land. So that was didn't seem that long ago it looked like that, I have
to say. And then we flip forward.
It's amazing F and A in eighteen months. So they've done a superb job. We are conscious, though, that it took a lot longer than we'd bargained for to get Nelly Melba open. And by that, I mean the time frame from buying the land to getting it consented and getting going. We've learned a lot.
We're our own worst critics, as you would hope and expect, and that's how we get better. So when I'm over in Melbourne talking to residents, you get great market intelligence on the ground. And the main impact that I can see of the Royal Commission and also the bad press from the retirement village seat to the year before is that the residents moving in with us have done a significant amount of due diligence. The industry is under a spotlight, and the residents and their families are well informed. And they're pleased with the scene that they see in us.
They like our apartments. They like our terms. They like the reassurance of having the care on the same site, and that's rare in Australia. And quite a few residents told me on that night that they had looked all around the area, and they could not find anything like Nelly Melba. To them, it was very special.
We also did a recruitment night last week. We got two thirty people in just introduce sort of caregiving nurse opportunities for the villages. So great turnout, and people were just blown away by what they saw. So we've added three sites in Victoria during the year, taking us to a total of 10, including two villages already open. We told you about Aberfeldy and Ocean Grove at half year.
And just to remind the non Malburnians amongst us, Aberfeldy is an Inner Melbourne site, not far from the CBD, an extremely good area with a shortage of retirement living options and aged care. Ocean Grove, which you can see on the screen, is on the Ballerine Peninsula, just down the road from Geelong and is an exciting prospect. And it looks pretty good, doesn't it? Looks like a pretty good place to live, and I can tell you that it's a beautiful place to sort of drive around and walk around. We've recently completed the purchase of a new 2.2 hectare site at Ringwood East.
That's our third for the year in Victoria. The site is close to the Eastgate sorry, the Eastland Shopping Center and is in Melbourne's green belt, bordered by Ringwood Lake Park. Eastlands got a David Jones, which I'm well informed means that it's pretty good for shopaholics, and it is an amazing mall actually. It's really beautiful. Ringwood East has everything we look for, a good sized retired population and a shortage of quality retired living options, and we think it is a stunner.
Last week, we hosted a smoking ceremony with the traditional custodians of the land at our Birbred East site. You can see that happening on the left there. This marks the start of work on the 2.5 hectare site, which is our third cap off the rank in Melbourne. We've also received development approval for our Heighton site in Geelong and will be underway there soon. Negotiations with the council, it's fair to say, took a bit longer than we'd hoped, and we're targeting to get it underway as soon as possible once the plans go through the formal endorsement process with the council.
We've carried out some early site works at Coburg, and we've got development approval application in for Aberfowdy. This is a picture of Aberfowdy just to the right there and where it's located. We're probably likely to shuffle the Aberfeldy side ahead of Coburg at this stage. Aberfeldy is a shorter build and will allow us to get a beachhead in that part of Melbourne much faster, which will pave the way for Coburg, which is about a fifteen, twenty minute drive. We're well on the way to have five village open in Victoria by the end of twenty twenty.
And our Melbourne development and construction team, they are fired up, I can tell you that. And we've been busy in New Zealand too. You can see the construction team have made great progress at our Linfield, Hamilton and Devonport villages. We've recently welcomed our first residents at each of these villages. In the montage of photos, you can see Judy, she's in the bottom right, who's moved into our William Sanders village.
I love her story because so she got these removal people to help her out. So she decided, oh, I'll just go to my tai chi class anyway in the morning. So she did tai chi in the morning while the house while people were moving into her house, and she said that she arrived into a new apartment in a zen like state, which is pretty unusual for a move in. Clifford and Gillian moved into Linda Jones from only from about two minutes down the road actually at Hamilton Village. They're just on the bottom left hand side there.
They're pretty excited. They broke their grandsons into helping them shift. And we were also delighted to have Linda Jones herself over from to launch the name in her honor. It's it's you sort of get a bit starstruck actually when you meet someone like Linda Jones, all the things that she's achieved. And she was really she really enjoyed it.
And one of the interesting things that she did, I and guess that's maybe one of the reasons why she's very successful, was that she mystery shocked us. So just to make sure that everything was in order. And thankfully, we did a good job, so that was good. Auckland land bank has been boosted by the acquisition of a new site in Kowi Marama. It is a 3.1 hectare site in a premier area, and we're working on plans for a village for more than 300 residents.
In addition, we've purchased a medical center next door to our Grace Joel village in St. Heliers. We have no immediate plans to develop the site, but it's an important strategic deal for us. And we've also brought two new villages in Christchurch new sites, I should say. The first is a five hectare site next door to Ricketon Racecourse with views overlooking the tracks, the Port Hills and the mighty Southern Alps.
It will provide us with a village amidst some prime suburbs with aging populations and fits nicely into our existing portfolio of Christchurch villages. And we've also purchased Bishops Park Village from Anglican Kieh. The 1.2 hectares site is a short distance from our existing Park Terrace site and looks across Hagley Park in the heart of Christchurch. We're going to take on the obligations to Bishops Park's existing residents, and we are reviewing plans to redevelop both sites as one village. The combination of the sites right on Hagley Park overlooking The Avon makes an exciting prospect.
And I think I'm going put my name down for an apartment for later on in life, although David might have already beefed me to it. A few of our ex directors as well,
I think.
Both Christchurch sites are still subject to overseas investment office approval, which we hope to receive shortly. I'm also pleased to let you know that we have just received in the last when was it? Monday, yes. On Monday, we received resource consent for our Headlock North village, and so we're gearing up to get underway there as well. And we're also underway at Lincoln Road in Auckland.
Gosh, that was a lot, wasn't it, to get to all those sites? In total, we expect to have 12 large construction projects underway in the coming year. And as I've said, we're moving into our biggest ever build program. And look, I'd just like to acknowledge Andrew Mitchell, who's headed our development team for twelve years, who's moving into a consulting role with us. It's great that Jeremy Moore, who's been with us for seven years in the development team working with Andrew, has stepped in to lead the team.
On March, we placed all of our Cross Street villages and head office into lockdown after we learned that a gunman was on the loose near Hagley Park. Our Margaret Sodard village, which is where my Nana lived, is a short distance from the Elnor Mosque. And while none of our team were caught up directly in the attacks, we had a number of people affected throughout the country through friends, family and relatives. The response from our team was extraordinary. A whole lot of people went the extra mile to ensure our residents were safe and comfortable as the events unfolded.
And it was really heartwarming for me to go around our villages that weekend to see the extra effort that staff are putting into residents who surely never expected to see such a thing in their city. Our Ronan family came together after that to raise $100,000 for the victims and families of the worst terrorist attack on our shore. We were humbled and proud of the response. We've also set up community engagement during the year, and a great example of this has been our relationship with the Stroke Foundation. We've helped deliver almost 10,000 free blood pressure checks, one of those was for me, across New Zealand, thanks to our stroke ban.
We funded the stroke ban for another three years. It actually is going to make a massive difference for people because high blood pressure is the primary indicator of a risk of stroke, and often people just don't know. So I think it's making a massive difference. And we're also going to put an identical ban on the road in Melbourne. I'd like to conclude by talking about the four people that you see on this slide.
They're pretty special people, and they sort of represent a great example of the influence that Ryman has in many ways. So on top left hand side, we've got Ella Baes, who you can see paragliding for her 100 birthday. She's just turned 105. And her I just want to let you know that next week, she's going to ride on a Harley Davidson for her latest birthday adventure. A three wheeler, just so you just in case you're worried.
She lives in the care center at our Jane Manda Village in Whangarei, and she's actually only the fourth oldest resident in Ryman. The lead, the construction chap there, Tyrone Keats, leaning against the wall, he's leaning against his own handiwork. He he had his own twenty first lately. He's an apprentice bricklayer who started with us as a laborer in Bitony, and now he's in Melbourne building Nelly, Melbourne. One of the contractors recognized how good he was, and he's now well on his way to his apprenticeship and was recently named Apprentice of the Year at the training institute that he attends.
His boss expressed it perfectly to us. Ryman Healthcare doesn't just create positive retirement experiences, they create opportunities for everyone involved in their projects. Next, Roger Garrett. He's a resident of Anthony Walding, that's the bottom left hand side there. He's 92, and his story featured in our annual ANZAC Day book called Stories of Valor.
Roger was part of J Force. He served in Hiroshima and Nagasaki and was a guard at the War Crimes Tribunal after the war. He also spent thirty seven years in the police, most of it in the armed offenders force before retiring, and we were delighted to be able to tell his story of extraordinary service to this country in our book. And these are the people that inspire us. We have thousands of people working with us, for us, who inspire us to do better.
And so I'd like to conclude with a quote from one of our clinical managers, who is Tracy Dunn. She's on the right hand side there. So Tracy, who's responsible for the clinical care of our residents at Bob Owens and Tauranga, we asked her to describe what motivated her. And she said, all I've ever wanted to do is make a difference in someone's life. And I get to do that for 120 people every day, and that is just a huge privilege.
And I think Tracy's expressed it perfectly, really. It really is a privilege, and it's also a privilege to work alongside people like Tracy and to be part of a team of thousands of people at Ryman who feel so passionately about what we do. And that is what drives our growth, our people. Thank you very much.
Thank you, Gordie, and good morning, everyone. So for the year that's just been, our underlying profit of GBP $227,000,000 is an increase of 11.5% on last year. The big driver being new sale gains, which were up 50% to GBP 86,000,000. Our reported profit or IFRS profit, which includes unrealized fair value gains on investment property was GBP $326,000,000, 62,200,000.0 less than last year. The reason for this drop is that last year's result was boosted by changes to the independent valuation assumptions.
As I explained at our half year result, in the year thirty one March twenty eighteen, CBRE, who are our independent valuers, lifted our five year plus growth long term growth rates from 2.8% to 3.4%. So the valuation gain of GBP 102,000,000 this year is due to us adding four fourteen new units and also due to pricing increases of 4.2%, which continues to reflect strong demand for our village offering. Our operating cash flows are GBP $4.00 1,000,000, and they are up 15%. So we have benefited from cash collections at some of our high value sites during the half. And for the first time, our cash receipts from residents exceeded $1,000,000,000 in the year.
So what this means is we had strong cash flows throughout the year and this allowed us to invest £552,000,000 in new villages and care centers. We've done this as follows: we invested GBP $430,000,000 building new villages GBP 55,000,000 on land with the land bank lifting to over 7,000 units in beds we invested GBP 33,000,000 in upgrading our existing villages and another GBP 35,000,000 on a range of projects, including IT infrastructure, new care hubs and further development of my environment. I've already talked about the lift in the valuation of our time and village units. But on top of this, we also performed our aged care facilities valuation this year as part of our two yearly cycle, and their value lifted by GBP 24,500,000.0 in the year. This increase goes directly to our reserves, so it doesn't have a profit impact in the current year.
With such a major investment during the year, our working capital has increased to GBP 1,300,000,000.0. We regard it as productive debt and we use it to investment the bulk of it in new villages where we recycle capital and which establish a growing tail of recurring cash flows. We have a very strong financial position with total assets of GBP 6,600,000,000.0, up 15% on last year and shareholder equity has lifted by 12% to GBP 2,200,000,000.0 compared to this time last year. We continue to have very supportive banking partners and they understand our growth plans and strongly support us. Our debt to debt plus equity ratio is 38%, so that's just 1% up from September year.
We also increased our bank facility this year to $1,700,000,000 and introduced the Bank of China to our syndicate. We also now have 95% of our facility at three or more years of tenure. Our gross development margin for the year was 30% and this is higher than our target range of 20% to 25%. This is a direct result of Nelly Melbourne in Victoria, which is a high margin site. However, it's also along with Davenport and Linfield in Auckland, which are also turning out to be very strong margin sites.
The resale bank of gains still to come currently stands at GBP $885,000,000. So these pent up gains mean we can expect resale earnings to keep on growing even if the housing market was flat for several years because volumes at our villages will increase as villages mature. Deferred management fees also reset to new price levels with each resell, so this creates a compounding effect. As David touched on earlier, demand remains strong with only 69 units or 1% of our portfolio available for resale at the end of the year. This represents only really one month trading stock for us.
And on top of that, key demand was also very high as we closed the year with occupancy at 97%. And when you compare this to the sector in general, which is averaging around 87%, it's a very good outcome and we're significantly outperforming the market. We also finished the year with presales at our new villages of 148,000,000. Affordability of our units is also something we monitor closely, and our residents in Auckland and Melbourne continue to free up significant amounts of capital when they move into Lyman Village. In fact, property prices in Auckland would have to drop a further 15% before residents stop freeing up capital and 25% in Melbourne.
We also have the largest service department portfolio in the sector with approximately 30% of our retirement village portfolio being service departments, which are a purely needs based decision. What triggers our ability to grow is simple. It's our model of recycling capital at each village. Since listing in 1999 and receiving raising £25,000,000 we have now invested $3,700,000,000 in our portfolio. And we paid out a growing dividend stream to shareholders of more than 800,000,000 and we've never had to raise any new capital.
And looking forward, we look at we've managed now to lift our underlying profit and increased our dividend every year for seventeen years, which is a very rare feat by any company. And we're determined to keep that track record going. And we see the growth in the future coming from four main reasons. First, we continue to have strong demand with only 1% of our resale stock available and 97% occupancy at our established care centers. Secondly, we have secured our tenth site in Victoria, which keeps us on track to continue to grow there and also to have our five villages opened by the end of twenty twenty.
Thirdly, we have lifted our land bank by 18% with more than 7,000 beds and units at 20 villages planned. And finally, our build rate is lifting with 12 sites targeted to be under construction in the coming year. So thank you very much. And I'll now hand back to David.
Look, thanks, Dave. Thanks very much. Before I open the session up to the floor, I'd just like to tie together a few points from our presentation. As I mentioned at the outset, market conditions were challenging. However, we've traded through well, and our expectation is we'll continue to do so.
Our focus remains on the long game, gearing up for the extraordinary years of growth ahead. As investors, you're likely to want to know what we think the difference is that will get us through. We don't take the challenges lightly. We're not complacent. We know there's plenty to worry about.
And I've read elsewhere that there are four areas that an investor would be interested in. The first would be the purpose of the company. And you know this well. It's exemplary. It's simply to look after older people to the very best standard we possibly can.
The second area an investor might be interested in would be the quality of the management. We've got an experienced, dedicated team with strong culture of doing the right thing for our residents and staff across all our villages and at all levels in the company. We continue to focus on adding strength and depth to that team, and this is paying off. The third thing that you might be interested in would be the financial strength of the company. I've already talked about the strength of our underlying profit, but bear in mind that with our terms, and we have the lowest deferred management fee capped at 20% of all the listed retirement village operators.
It's 50% lower than some of our rivals. This gives us a significant competitive advantage when market conditions change. That low DMF, combined with our fixed fee model, which is fair and residents love, make moving into Ryman Village a compelling option. 50% of our underlying profit is retained to invest in clinical excellence and enhancing the quality of life for residents. We've been consistently lifting the standards by investing in innovation and technology, and we're getting the best audit results.
And finally, the fourth thing that an investor might be interested in would be our potential for growth. Our existing sites are in excellent areas and are in strong demand. We recycle capital effectively. We continuously reinvest in our villages, and we keep them up to date and they're in demand. As well as a great existing portfolio of 36 villages, we've got a record pipeline of villages in excellent areas to build and a significant number are already consented.
So the reputation and the trust that we've built by caring for thousands of people and their families over thirty five years is really important. So I'd now like to open the session up for questions from the floor. And following that, we'll take questions from callers who are on the conference call line. We'll bring a microphone around for those of you with a question in the room in order that you can be heard. It's important that the people on the webcast can hear clearly as well.
For those of you listening on the phone conference, operator will advise you when you can ask a question. So questions, thank you.
First one from me is just on current market dynamics. You've noticed noted some softness. I wondering if you could provide a bit more color as to how trends in days to settlement and days to sale new sales stock have been recently compared to, say, a year ago.
Yes. So in terms of the days to settle, we haven't actually seen any increase. In fact, it's actually slightly shorter for us in terms of our resale stock, the days to settle on that than what it was a couple of years back. So the trend hasn't been or it's been good on that front. And in terms of, the selling, we're still selling well off plans.
So we've got, we could presales at end of the year at £148,000,000 so the demand is still strong for our new sales as well.
And if you look at your realized pricing versus the pricing assumption built into CBRE valuations, what sort of premium are you achieving over that assumption currently? And where was that, say, a year ago?
We're achieving a small sort of premium over the top of that. CBO, we obviously look at the data that we have over the last six months, and they follow us. Obviously, as the market's flattened out, we have been cautious with our pricing in the last six months, but we've continued to achieve good pricing. We haven't had to pull our pricing back. So CBRE have just monitored that and probably closed the gap slightly, but yeah, there's still plenty of headroom.
Think, Andrew, one big of highlights for me when the numbers got pulled together by the team is just seeing cash receipts from customers hitting $1,000,000,000 for the first time in the company's history and growing 15%. Now in really challenging market conditions, it's a tremendous achievement.
And just on you've noted the development profile that you have ahead of you. Just thinking about what that means for your CapEx commitments for the year ahead and the new land purchases that you've also announced, how should we think about sort of a total CapEx number into the new year?
Yes. So obviously, like our investment is going to increase. We don't give guidance on exactly what our CapEx will be because obviously it will depend on when we get going on those 12 sites. But we have seen a significant list in our investing cash flows over the last couple of years. We'll continue to see that as we build that momentum.
And that's one of the reasons why we've increased our bank facility to make sure we can maintain plenty of headroom to do that. The bank facility is sufficient to do that in our modeling, and we'll still maintain appropriate headroom. So And just on that point on sort of debt facilities. As you're growing and investing more and your requirement for debt is that much greater, how are
you thinking about having sufficient diversity in funding group, or sources of funding? Are you looking at introducing a bond? And do you feel that you have, sufficient diversity in your banking syndicate?
Yes. So obviously, we are looking at the the bond market. It's something we will continue to consider, but we haven't made any firm plans around that at this stage. But we've brought Bank of China on, so we're diversifying our banking partners and introducing new partners to give us more diversity and also away from some of the sort of New Zealand Australian banks as well to make sure we do have a bit more flexibility in that group.
And just to clarify, what how many banks are in the group at the moment? Six. Six. Great. That's all from me.
That's very helpful. Thanks.
Yes. And we have a I think it's fair to say we have quite a different banking relationship with our banks. We're very close with them. We update them on they really understand what we're doing. We don't I'm aware that some businesses, I think, treat banks as just the banks, but we treat them as a key business partner of ours.
And they're very, very supportive. And so when it's quite a high hurdle to come into the Ryman syndicate, We introduced the first new bank back in about 02/2009. We've grown it very cautiously and conservatively since then. And it's a very well established unit, if you like. So it's not a relationship where we sort of play one off against another.
It's a good team. It's a good team.
Jeremy Simpson at Westlake Baja. Just some development questions. Geelong one, you said you're just waiting for the final sign off of the plans. When do you think you'll be actually be able to be digging?
Well, I hope in the next couple of months.
Okay. Yes. That's good. Yes.
And just the Bishops Park project looks interesting. The Yes. How many residents are there? What are the logistics of finding homes for them while you're doing the redevelopment?
Yes. So when we initially started discussions with the Bishops Park's residents, when I went out there, gosh, six months ago probably, actually. There was still a care center in operation and also probably about I think about 40 retirement village residents. So what we've offered those residents to ensure a really pain free transition is that under no obligation to accept it, but we've offered people to be able to move into any of the six Ryman Christchurch villages at no extra capital cost to equivalent type units. And then when we have built the village, assuming it assuming we're able to get all the approvals, etcetera, that they're about to move back as well with no additional capital cost because I think that's fear.
If someone has been there for a number of years and their historic occupancy advance has stayed the same, it's not fear for people to wonder how they might come up with additional capital to deal with an unusual situation. So it was the Anglicans who decided to pull out of doing aged care in the village because it wasn't profitable for them anymore, losing too much money. And we also worked with the care center residents, again, to offer people to be able to come into any of our aged care centers under the same terms and conditions they were enjoying. We got a lot of good feedback actually about taking all the financial stress away for people at a really difficult time. And I think there's about 15 people there today.
And obviously, we still need to get overseas investment approval to fully secure the site, which we expect anytime soon.
Great. And just lastly, what sort of build rate should we be thinking about for this year and next year in terms of beds and units?
Yes. Well, we had a build rate this year of seven fifty seven bids and units. So I think something in the region of sort of $850,000,000 to 900,000,000 would be good. Maybe 900,000,000 And then for the following year, it'd be higher again. Maybe nudging into the 1,000 million
morning. I'm Stephen Richwell, Craigs, Investment Partners. Just firstly, a question on the result. It was a strong second half on the development side, particularly margin up to 32% from 27% in the first half. And if I recall correctly, the interim result, you'd flagged that you might see a bit of softening in that margin that's gone the other way.
So just interested if you could give us a little bit of color as to what resulted in that better margin in the second half, please.
Yes. So in Australia, Stephen, the continued strong pricing in Alley Malba continued with build costs that essentially have matched the end of the Buried Dunlop build back in probably about 2014. So those jaws widened. We don't like to count on that, but the market remained in those sort of conditions in the second half, which was really favorable. And also, despite the really difficult Auckland challenges with the Auckland housing construction market, we're still able to get, well, one, good pricing for those three Auckland villages coming through and also construction costs, which were not quite as bad as what we thought they'd be.
Ended up with good margin across all four.
That's helpful. And it looks like you brought some great sites. Was wondering who was going buy that. You picked it up. So just broader question on the landings.
Have 37,000 units in beds now. I think you've expressed the desire to get to four villages a year in the medium term. So that sounds like about 1,600 units of beds a year. So you're at about four point five years land bank now. But noting your comments earlier, Gordon, in Australia, perhaps the continuing time frame is bit longer than expected, probably a little bit in Auckland as well.
How many years of land bank do you sort of think you need to be able to deliver on that ambition? Is it five or six years? Just trying to get a bit of a sense as to where the land bank might be heading in the couple of years, please.
Yes. Yes. So look, think, like, in an ideal scenario, Stephen will be in a position in, say, two to three years' time where a land bank would reflect that sort of build rate times, say, 4.5.
Yes. And
just on the comments on there's obviously a well publicized wage pressure in the aged care sector, and no doubt the wage increase is well deserved by the staff. But from an investor perspective, is there any offset that you can see in that part of the business in terms of getting economies of scale or other kind of efficiencies in the business to try and offset the wage pressure?
I think, Matt, the reality is that the government cannot continue to underfund aged care in New Zealand so chronically. And so we've taken a decision that it's vital to hold on to our 05/20 or so registered nurses that we have. What you've seen with other operators is that there's some care centers, Stephen, they've lost all of their nursing staff in the last few months to the DHBs. Now yes, there's a $5,000,000 cost in paying people more, but what's the cost of losing all the nurses? I'd say it's arguably more.
So and what's the offset from it? Well, we work very hard with the government together with the Aged Care Association, so there's a good understanding of, I guess, what fair returns should start to look like soon. And when we hear things like in Northland or in Southland or in Nelson, where, for example, dementia care facilities are almost unavailable now, the suppliers got so restrained, the reality is that something will change in a sector that's chronically underfunded and for which there's significant demand. It just has to.
Stephen, the other comment I'd make is that in terms of productivity, we know that if we've got an engaged group of staff, we'll achieve a 20% increase in productivity and an 80% reduction in staff turnover. So we've told you that staff engagement is at the best level ever. So we're achieving productivity for the investment.
Great. Thanks for those comments. And then just a broader question on market conditions, which you have touched on. Certainly, we have been hearing there's a bit more above the line discounts and offers and that kind of thing in the sector. Your comments demand has been strong.
You've had a good March, etcetera. But can you just give us a little bit more color as to at village level or within Auckland Mill in particular, how the company is evolving its marketing and offer to incoming residents? Is it more or less steady as you guys?
Yes. It's steady as you guys. We don't want Kevin to turn up and tell us that they're doing something crazy. And look, what that means is that we're just straightforward with people. So we don't sort of deal with someone today and then next week, we tell them a different price and then different and people get sort of unsteady and not quite know where you're actually at.
And the other thing we don't sort of do is say, well, we've got a year March and we've a half year at the September. So we don't offer unique deals to those residents. So for example, we've seen in the market people offering free weekly fees for two years, for example. Now when that resident moves into the next door neighbor, the first thing they'll talk about is the fact that they're not paying weekly fees for two years, but the other person is. And those sort of inequities, I don't think people really appreciate them in terms of people living together and understanding an element of fairness.
So we don't sort of chuck down $20,000 things here, weekly fee things there. We offer a really fair deal. 20% DMF, kept for life, fixed weekly fees, pricing that's fair, great range of care, great service. And for people who are looking, we are absolutely up there in the choice that they will make. So we really resist that sort of short term stuff.
That's great color. Thank you. That's all for me.
Jeremy Kincaid from UBS. Just following on from Stephen's question just then. Should we see substantial tightness in the market? If you're not willing to offer various incentives and the like, what levers are you willing to pull to sort of drive sales should things tighten?
Well, always have to you have to do a number of things, really. You've got to have really strong community relations so that the pipeline of people that are interested and strong. You've got to have you've to be performing at a village level so that people's word-of-mouth in the area see you as the place to be. You've to have happy residents so that word-of-mouth spreads and happy staffs who do a good job. You've got to be able to invest in the facilities so they always look nice.
You've got to have the best terms in the sector. You've got to have a care offering, which is comprehensive and includes secure dimension level care. And so if you have a really terrific offer our view is that if you have a really terrific offering, offering what we would see as the best arguably the best terms in the sector, excellence, service excellence, you've seen the sort of ongoing and relentless pursuit we have of making life for residents better, then that's actually, for us, what drives demand. And so in a, again, a difficult market this year, that's why we've only got 1% resale stock. That all underpins the affordability graph that David Bennett showed you, which showed you that there is a good gap between real estate between residential pricing and entering a village or having service department.
Yes. I think it's really important that what we talk about the team is it's really important to trust the process, trust in what we do. And that's the most effective way to ensure demand and a list. And I think that people don't really relate to a price with a big line through it saying $50 off and that sort of thing. So that's quite a different market, I think.
Great.
My next question is just on the village you purchased in Christchurch. Are you able to give an indication as to whether or not that was at a premium or a discount to NTA?
Well, what it was, was we assumed the liabilities of the residents. So the capital sums are paid minus the deferred management fees. It's our obligation to pay for those pay those people out in due course when that happens. And that was it.
Okay, great. And then just also at your other site in Victoria, the sales appears to be going strong there. Are you able to give an indication of what the price point is there for that village? And then where that sits relative to the surrounding villages?
Yes. Well, Dave, you want deal Is that Nelly Melbourne? Yes, Nelly Melbourne. Yes. So that is that chart that we showed, that is the is pretty much difference.
So obviously, Nelly, Melbourne and Wiri Dunlop are in the same sort of geographical area, same market in similar pricing because different offerings for what people look for. So we're at about a 25% discount to the surrounding market there. The market has pulled back over the last six months, but we've been able to maintain our pricing because of the buffer we've had there.
Okay, great. And then very lastly for me, David. Your bank facility has obviously gone to £1,700,000 Does that imply to the market that your modeling doesn't suggest that bank debt tracks above that level over the sort of foreseeable future.
That's true. Yes. It's quite I mean, it's quite an interesting conundrum for people if they move into Nelly Melbourne and they sold their house for, say, 400,000 above able to collect freed up, say, 400,000 of capital because often for people in life, the house is their most major asset. And so when so again, that grand opening night, quite a few people quietly said to me, what do you do with 400,000? And because it's a quality problem that a lot of people have never had.
And of course, someone moved into a service department, you're looking at sort of freeing up 100,000. So it's a great way for people to free up equity and downsize, and it really sort of shows through in that market.
They're largely 80 years of age and more, mortgage free, so they are going to free up significant sums of money. Other questions? Should we just see if there are questions on the line? Thank you.
Your first question comes from Meyer Candlewell from Candlewell and Company. So I had a couple of questions primarily around Australia. First was Geelong project. I know that there was some, I guess, pushback in the community. And has that pushback experience impacted your evaluation for the 900,000,000 build rate?
Yes, I can deal with that
question now. So the question was there was some pushback in the local community about Geelong and has that affected our I guess, our build rate that will result from the village. Yes. So what happened was the team and myself were at a hearing just before Christmas at the Geelong City Council. The councillors at that point get a chance to vote in favor of the application or not.
They chose to defer the decision to a thing called VCAT, which is the equivalent to New Zealand Of The Environment Court, I guess. So then what happened is that we the objecting residents and us had the opportunity to have a mediated session through VCAT about five weeks ago, I suppose. And that outcome was successful. So what we did was we moved townhouses about five meters, I think it was, back from the western boundary. And we also removed about six I think we removed about six townhouses from the scheme.
That created a greater sense of space between the neighbors who were particularly affected and also created some more space in the village and didn't affect our feasibility materially. So it's a really good outcome because the community was really happy that we had listened to their concerns. Nevertheless, we did go into that mediation with a fully supportive decision from the Geelong Council in terms of the development complying with every single requirement for the development overlay. The purpose of the VCAT meeting was really to see if resident concerns could be mediated before a formal tribunal. And that outcome was really successful.
Okay. And has that changed your approach to Australia developments at all? Or are you more concerned that development may be slow in Australia? Or do you believe that the work can move more rapidly then?
No. We eventually assumed for some time that the majority of development approval processes may somehow go through VCAT. It's quite a it's a very, very common process in Victoria, more common than not. And so it's great to have gone through our first process, which actually I thought was quite quick. The decision was turned down at the right at the December, and we had an answer pretty much by the April fully sorted.
So that was quite good. What the real lesson learned from it was that I would have liked to have got the development application in probably six months earlier is a lesson learned internally because we can control that. And obviously, we're just keen to keep our position of talking with neighbors and understanding their concerns and perhaps trying to address that as soon as we can, earlier on, if that makes sense.
Okay. And then along the Australia theme, is there a thought of listing in Australia? Right now, I guess, on the horizon, about 10% of your properties will be better than 10% will be in Australia, right, at some point in time. You have a reputation of community there as a place for the others. Would also be nice for them to put the capital to work there as well.
Yes. So it's a question whether we're considering listing in ASX?
That's right.
Sorry, just missed the first part. Okay. So the question is, are we thinking of listing on ASX? We're doing absolutely no work on that at this point in time. It's not under active consideration.
It has been in the past, but we've decided not to do it for various reasons, one of which being that we're getting excellent access to international investors through Europe, America, Asia, all over the world, including Australia. And so we're just wondering what the value of an ASX listing is actually, particularly as the New Zealand market cap that we have is not recognized in Australia except for the Australian traded component. So and the other sort of slight irritant is that the listing fees are huge, and they won't cut a deal. So anyway, so with ASX, I think we'll just leave that for the time being. It wouldn't rule out other exchanges outside of Australia.
There are no further questions at this time. I'll now hand back to Doctor.
You for joining us. Let's have an informal discussion over a cup of tea and a sandwich, and we look forward to a more formal briefing at the time of the AGM. So thank you very much.