Good morning, everyone, welcome to Ryman Healthcare's full year results presentation. My name is David Kerr, sitting beside me is Gordie MacLeod, our Chief Executive, beyond him, of course, David Bennett, our Chief Financial Officer. Thank you to everyone who's made it along this morning. It's a special morning actually, this morning, we've been joined by Kevin and Jo Hickman. Kevin was a co-founder of the company and recently retired as a Director. Critically, what Kev did was he set this ship on its course. He established those core values, which have been with us for 30-something years. He has enabled us to operate in the way that we have, constantly focusing on those values. Kev, you'll be pleased to hear that things are unchanged. They're still firmly in our DNA, those original values. Also joined by Geoffrey Cumming.
Jeff, welcome. Jeff is a Director of Ryman, has been for a little over a year. Jeff has been a long-term investor in the company and has had a long-term interest in how we go. In fact, he rejoined the board, having been on the board just immediately after the IPO, that's just on 20 years ago. He's really proven to be of a great value in his role as a Director. Finally, I should just acknowledge Andrew Clements. Clem, great to see you also. Clem 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. Welcome, everybody, but welcome specifically to those three. 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 talk about the operational highlights and about the momentum that we're gaining in Victoria and in New Zealand. David will 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. 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 the people on the webcast can hear you clearly.
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. 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 NZD 227 million. The reported or IFRS profit, which includes, of course, the unrealized valuations, declined 16% to NZD 326 million. The 2018 full year result was boosted by changes to the independent valuation assumptions, there were no significant changes to the assumptions in the 2019 year. The full year dividend has been lifted to NZD 0.227 per share in line with the growth in the underlying profit. Payment will be on June 21st with a record date of June 7.
Our net assets have reached NZD 2.17 billion, up from NZD 1.94 billion. Importantly, our operating cash flows rose 15% to NZD 401.4 million, with cash receipts from residents exceeding NZD 1 billion for the first time. This has allowed us to invest a record NZD 552 million in new and existing villages during the year, up from an investment last year of NZD 478 million. Our underlying profit of NZD 227 million reflects how the company has actually been trading and is used to determine the dividend. The result came within the NZD 223 million-NZD 238 million range that we set at the half year result briefing, 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, we'd expect volumes to grow in the medium term with the portfolio's growth. As a company, we're very focused on growth, 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 the 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 villages 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%, 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 Mum. We've been doing this now for 35 years, 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, 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, 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, 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 a 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. 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. We immediately matched the pay rates being offered to DHB nurses. That decision, which was worth NZD 5 million 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 NZD 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 its second year, and 280 of our leaders have been participating. We've refined and developed the course and are launching LEAP 2.0. Initiatives such as the LEAP program and the Ryman Academy recognize that there's more than just pay to work. 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. Clearly, our residents will continue to benefit from 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. We'd 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.
Last week, myRyman won a best innovation award at the Asia Pacific Eldercare Innovation Awards in Singapore. We've talked about myRyman before with you, and myRyman's 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 on myRyman. 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 myRyman. A significant project during the year involved a refresh of our approach to dementia care. We've been providing dementia care for over 20 years, and it is a cornerstone of our care offering. We currently have 840 dementia beds and have 660 more in the build program. We'll be rolling out a program called myRyman 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 audit. Normally, new villages are given shorter terms so that the auditors can see how things bed in. We think that's an extraordinary achievement. 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 at enhancing their quality of life. We call this Ryman Delight. For many of our residents, cooking has become a bit of a chore. 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 theater. 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. A 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 to them with similar discounts. The cards mean that the residents and team can make the most of our buying power. Our suppliers are more than happy to be part of the Ryman community. Keeping our existing villages up to date and in great condition is a further area of investment during the year.
We have 36 villages in operation now. 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. I recently visited Woodcote Village in Christchurch, one of Kev's very first villages, and also the Rowena Jackson Village in Invercargill. 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. The momentum that the company has built up is very significant. We've talked about five villages open in Victoria by the end of 2020, 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 20 sites under construction or in the planning and design stages. Gordie's going to talk you through those in just a moment. Finally, you're all aware of the demographics that provide the backdrop for our growth plans. This first slide shows you the current demographics, which have driven our growth to date. The second slide shows the growth over the next 30 years. These demographics underpin everything we do. We listed on the NZX almost 20 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. There's lots of people watching online as well, I 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. I just wanted to acknowledge the huge amount of work that my predecessor, Simon Challies, has put into myRyman. He put countless hours into it, and it was a real labor of love for him. 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.
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. I just wanted to acknowledge that up front. David has outlined some pretty remarkable achievements during the year from the team. 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. I'm also incredibly excited about what lies ahead and how we're going to grow.
We've gathered a huge amount of momentum in our build rate. That lifted 42% during the year to 757 beds and units. I think that those of you who read the paper will know that that means that we beat KiwiBuild. Anyway, I didn't really say that. All going well with consents and development applications, we're expecting to have work underway on 12 sites in the coming year. We're about to move into our biggest ever build program. Our land bank now totals more than 7,000 beds and units. 40% of these are consented. This means we've 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. There's been a cooling 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 365 days has had a negative story about the property market printed. They're rather repetitive 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. 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. 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 Vestey, an English peer who was the great-grandson of Dame Nellie. I haven't done very many speeches with lords. He's a lovely chap. He took a huge amount of interest in the village in 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. He told me at the end of the evening that he had talked to about 70 residents about how they were finding life in the village. For those of you who've been to England, there's nothing like this in England, so he was very intrigued.
He couldn't believe how happy everybody was. To me, that says it all, and I got the same feedback during the night, too. You know that our success is always going to be defined by whether we make people happy. 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. 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 Nellie Melba over the past 18 months. Have a look at this. We'll go back to the bare land. That didn't seem that long ago it looked like that, I have to say.
Then we flip forward. It's amazing here today in 18 months. They've done a superb job. We are conscious, though, that it took a lot longer than we'd bargained for to get Nellie Melba open. By that, I mean the timeframe 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. When I'm over in Melbourne talking to residents, you get great market intelligence on the ground. The main impact that I can see of the Royal Commission and also the bad press from the retirement village sector 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.
They're pleased with the standard 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. Quite a few residents told me on that night that they had looked all around the area and they could not find anything like Nellie Melba. For them, it was very special. We also did a recruitment night last week. We got 230 people in just to introduce caregiving nurse opportunities for the villages. Great turnout, and people were just blown away by what they saw. 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 Aberfeldie and Ocean Grove at half year.
Just to remind the non-Melburnians amongst us, Aberfeldie is an inner Melbourne site not far from the CBD in 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 Bellarine Peninsula, just down the road from Geelong, and is an exciting prospect. 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 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 Eastland shopping center and is in Melbourne's green belt, bordered by Ringwood Lake Park.
Eastland's got a David Jones, which I'm well informed means that it's pretty good for shopaholics. It is an amazing mall, actually. It's really beautiful. Ringwood East has everything we look for. A good size retired population and a shortage of quality retired living options. We think it is a stunner. Last week, we hosted a smoking ceremony with the traditional custodians of the land at our Burwood 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 cab off the rank in Melbourne.
We've also received development approval for our Highton site in Geelong, and we'll be underway there soon. Negotiations with the council, it's fair to say, took a bit longer than we'd hoped. We're targeting to get 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. We've got development approval application in for Aberfeldie. This is a picture of Aberfeldie just to the right there and where it's located. We're probably likely to shuffle the Aberfeldie site ahead of Coburg at this stage. Aberfeldie 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 15-20-minute drive.
We're well on the way to have five villages open in Victoria by the end of 2020. Our Melbourne development and construction team, they are fired up, I can tell you that. We've been busy in New Zealand, too. You can see the construction team have made great progress at our Lynfield, 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 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." She did Tai Chi in the morning while people were moving into her house, and she said that she arrived into her new apartment in a Zen-like state, which is pretty unusual for a move-in. Clifford and Jillian moved into Linda Jones only from about two minutes down the road, actually, at our Hamilton village. They're just on the bottom left-hand side there. They're pretty excited. They roped their grandsons into helping them shift. We were also delighted to have Linda Jones herself over from Queensland to launch the name in her honor. You sort of get a bit starstruck actually, when you meet someone like Linda Jones, all the things that she's achieved.
She really enjoyed it. One of the interesting things that she did, and I guess that's maybe one of the reasons why she's very successful, was that she mystery shopped us, just to make sure that everything was in order, and thankfully, we did a good job. That was good. Our Auckland Land Bank has been boosted by the acquisition of a new site in Kohimarama. 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. We've also bought two new villages in Christchurch. New sites, I should say.
The first is a five-hectare site next door to Riccarton Racecourse with views overlooking the tracks, the Port Hills, and the mighty Southern Alps. It'll provide us with a village amidst some prime suburbs with aging populations and fits nicely into our existing portfolio of Christchurch villages. We've also purchased Bishopspark Village from Anglican Care. The 1.2-hectare 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 Bishopspark'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. I think I'm going to put my name down for an apartment for later on in life, although David might have already beaten 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. On Monday, we received resource consent for our Havelock North village, so we're gearing up to get underway there as well. We're also underway at Lincoln Road in Auckland. Gosh, that was a lot, wasn't it? To get through all those sites. In total, we expect to have 12 large construction projects underway in the coming year. As I've said, we're moving into our biggest ever build program. Look, I'd just like to acknowledge Andrew Mitchell, who's headed our development team for 12 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 15 this year, we placed all of our Christchurch villages and head office into lockdown after we learned that a gunman was on the loose near Hagley Park. Our Margaret Stoddart Village, which was where my nana lived, is a short distance from the Al Noor Mosque. 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.
It was really heartwarming for me to go around our villages that weekend to see the extra effort that staff were putting into residents who surely never expected to see such a thing in their city. Our Ryman family came together after that to raise NZD 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 stepped up our community engagement during the year, 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 van, and we've funded the stroke van 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 for stroke, and often people just don't know. I think it's making a massive difference. We're also going to put an identical van 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. On top left-hand side, we've got Ella Bayes, who you can see paragliding for her 104th birthday. She's just turned 105. I just wanted 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 in case you're worried.
She lives in the care center at our Jane Mander Village in Whangarei, and she's actually only the fourth oldest resident in Ryman. The lad, the construction chap there, Tyrone Keech, leaning against the wall. He's leaning against his own handiwork. He had his own 21st lately. He's an apprentice bricklayer who started with us as a laborer in Petone, and now he's in Melbourne building Nellie Melba. 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 at Anthony Wilding. That's 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 ayforce. He served in Hiroshima and Nagasaki and was a guard at the war crimes tribunal after the war. He also spent 37 years in the police, most of it in the Armed Offenders Squad, before retiring, and we were delighted to be able to tell his story of extraordinary service to this country in our book. These are the people that inspire us. We have thousands of people working with us, for us who inspire us to do better. 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.
Tracey, who's responsible for the clinical care of our residents at Bob Owens in 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." I think Tracey's expressed it perfectly, really. It really is a privilege, and it's also a privilege to work alongside people like Tracey and to be part of a team of thousands of people at Ryman Healthcare who feel so passionately about what we do. That is what drives our growth, our people. Thank you very much. Over to David.
Thank you, Gordie. Good morning, everyone. For the year that's just been, our underlying profit of NZD 227 million is an increase of 11.5% on last year. The big driver being new sale gains, which were up 50% to NZD 86 million. Our reported profit, or IFRS profit, which includes unrealized fair value gains on investment property, was NZD 326 million, NZD 62.2 million 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 to 31 March 2018, CBRE, who are our independent valuers, lifted our five-year plus long-term growth rates from 2.8% to 3.4%.
The valuation gain of NZD 102 million this year is due to us adding 414 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 NZD 401 million, they are up 15%. We've benefited from cash collections at some of our high value sites during the half. For the first time, our cash receipts from residents exceeded NZD 1 billion in the year. What this means is we had strong cash flows throughout the year, this allowed us to invest NZD 552 million in new villages and care centers. We've done this as follows. We invested NZD 430 million building new villages, NZD 55 million on land, with the land bank lifting to over 7,000 units and beds.
We invested NZD 33 million in upgrading our existing villages another NZD 35 million on a range of projects, including IT infrastructure, new care hubs, and further development of myRyman. I've already talked about the lift and the valuation of our town and village units. On top of this, we also performed our aged care facilities revaluation this year as part of our two yearly cycle, their value lifted by NZD 24.5 million in the year. This increase goes directly to our reserves, 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 NZD 1.3 billion.
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 NZD 6.6 billion, up 15% on last year, and shareholder equity has lifted by 12% to NZD 2.2 billion 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 this year. We also increased our bank facility this year to NZD 1.7 billion and introduced the Bank of China to our syndicate. We also now have 95% of our facility at three or more years in tenure.
Our gross development margin for the year was 30%, this is higher than our target range of 20%-25%. This is a direct result of Nellie Melba in Victoria, which is a high-margin site. However, it's also along with Devonport and Lynfield in Auckland, which are also turning out to be very strong margin sites. The resale bank of gains still to come currently stands at NZD 885 million. 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 resale, 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's trading stock for us. On top of that, care demand was also very high as we closed the year with occupancy at 97%. When you compare this to the sector in general, which is averaging around 87%, it's a very good outcome, we're significantly outperforming the market. We also finished the year with pre-sales at our new villages of NZD 148 million. 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 a Ryman 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 raising NZD 25 million, we have now invested NZD 3.7 billion in our portfolio, we've paid out a growing dividend stream to shareholders of more than NZD 800 million, we've never had to raise any new capital. In looking forward, we've managed now to lift our underlying profit and increased our dividend every year for 17 years, which is a very rare feat by any company. We're determined to keep that track record going. 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 10th site in Victoria, which keeps us on track to continue to grow there and also to have our five villages open by the end of 2020. Thirdly, we have lifted our land bank by 18%, with more than 7,000 beds and units at 20 villages planned. Finally, our build rate is lifting with 12 sites targeted to be under construction in the coming year. 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, 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. 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 a 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, we're getting the best audit results. 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. The reputation and the trust that we've built by caring for thousands of people and their families over 35 years is really important.
I'd now like to open the session up for questions from the floor. 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 you clearly as well. For those of you listening on the phone conference, the operator will advise you when you can ask a question. Questions. Thank you.
First one from me is just on current market dynamics. You've noted some softness. I was wondering if you could provide a bit more color as to how trends in days to settlement and days to sale in new sale stock have been recently compared to, say, a year ago.
Yeah. 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. The trend hasn't been well, it's been good on that front. In terms of the selling, we're still selling well off plans. We've got well, presales for end of the year at NZD 148 million. The demand is still strong for our new sales as well.
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?
That's a good question. We're achieving a small sort of premium over the top of that. CBRE obviously look at the data that we've 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. CBRE have just monitored that and probably sort of closed the gap slightly, but there's still plenty of headroom.
I think, Andrew, one of the big highlights for me when the numbers got pulled together by the team is just seeing cash receipts from customers hitting NZD 1 billion for the first time in the company's history and growing 15%. In really challenging market conditions, that's a tremendous achievement.
Just on, you know, you've noted there 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 a sort of total CapEx number into the new year?
Yeah. Obviously, our investment's going to increase. We don't give guidance on exactly where our CapEx will be because obviously it will depend on when we get going on those 12 sites. We have seen a significant lift in our investing cash flows over the last couple of years. We'll continue to see that as we build that momentum. 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.
Just on that point on to the debt facilities. As you are growing and investing more and your requirement for debt is that much greater, how are you thinking about having sufficient diversity in your 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. Obviously, we are looking at the bond market. It's something we will continue to consider, we haven't made any firm plans around that at this stage. We've brought Bank of China on, 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.
Just to clarify, how many banks are in the group at the moment?
It's just six.
Six. Great. That's all from me. That's very helpful. Thanks.
Yeah.
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, you know, that they really understand what we're doing. 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. When it's quite a high hurdle to come into the Ryman syndicate, you know, we introduced the first new bank back in about 2009. We've grown it very cautiously and conservatively since then. It's a very well-established unit, if you like. It's not a relationship where we sort of play one off against another. It's a good team. It's a good team. Yeah.
Hi. Morning, guys. Jeremy Simpson at Forsyth Barr. Just some development questions. The Geelong one, you said you're just waiting for the final sign-off of the plans. When do you think you'll actually be able to be digging?
Well, I hope in the next couple of months.
Okay.
Yeah.
That's good.
Yeah.
Just the Bishopspark project looks interesting.
Yeah
How many residents are there? What are the logistics of finding homes for them while you're doing the redevelopment?
Yeah. When we initially started discussions with the Bishopspark 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. 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. When we have built the village, assuming we're able to get all the approvals, et cetera, they'll be able to move back as well with no additional capital cost. I think that's fair.
If someone has been there for a number of years and their historic occupancy advance has stayed the same, it's not fair for people to wonder how they might come up with additional capital to deal with an unusual situation. 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. 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. I think there's about 15 people there today.
Obviously, we still need to get overseas investment approval to fully secure the site, which we expect any time soon.
Great. Just lastly, what sort of build rate should we be thinking about for this year and next year in terms of beds and units?
Yeah. Well, we had a build rate this year of 757 beds and units. I think something in the region of 850 to 900 would be good.
For this year?
Yeah.
Next year?
Maybe 900. For the following year, it'd be higher again.
Okay.
Yeah. Maybe nudging into the 1,000.
Great. Thank you.
Yeah.
Good morning. I'm Stephen Ridgewell, Craigs Investment Partners. 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. If I recall correctly at the interim result, you'd flagged that you might see a bit of softening of that margin that's gone the other way.
interested if you could give us a little bit of color as to what resulted in that better margin in the second half, please.
Yeah. In Australia, Stephen, the continued strong pricing in early Melbourne continued with build costs that essentially have matched the end of the Weary Dunlop build back in probably about 2014. Those draws widened. We don't like to count on that, the market remained in those sort of conditions in the second half, which was really favorable. Despite the really difficult Auckland challenges with the Auckland Housing construction market, we were still able to get, well, one good pricing for those three Auckland villages coming through, 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. Thank you. It looks like you bought some great sites.
Yeah.
Drove past Kohimarama-
They're really good
A couple of times and was wondering who was going to buy that.
Yeah.
You picked it up.
Yeah.
Just a broader question on the land bank. Up to 7,000 units and beds now. I think you've expressed the desire.
to get to four villages a year in the medium term. That sounds like about 1,600 units of beds a year.
Yeah
you're at about four and a half years land bank now. Noting your comments earlier, Gordie, that look, in Australia, perhaps the continuing time frame is a bit longer than expected, probably a little bit in Auckland as well. How many years land bank do you think you need to be able to deliver on that ambition? Is it a five or six years? Just trying to get a bit of a sense as to where the land bank might be heading in the next couple of years, please.
Yeah. Look, I think in an ideal scenario, Stephen, we'll be in a position in, say, two to three years' time where our land bank would reflect that sort of build rate times, say, four and a half. Yeah.
Okay. Thank you. Just on the comments on, there's obviously well-publicized wage pressure in the aged care sector, and no doubt the wage increase is well deserved by the staff.
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?
Yeah, look, I think that the reality is that the government cannot continue to underfund aged care in New Zealand so chronically. We've taken a decision that it's vital to hold on to our 520 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 NZD 5 million cost in paying people more, but what's the cost of losing all the nurses? I'd say it's arguably more. 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.
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 that 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. We've told you that staff engagement is at the best level ever. We're achieving productivity for the investment.
Yeah.
Great. Thanks for those comments. Then just a broader question on market conditions, which you have touched on.
Yeah
Certainly, we have been hearing there's a bit more above the line discounts and offers and that kind of thing in the sector. Note your comments, demand has been strong, you've had a good March, et cetera. Can you just give us a little bit more color as to at a village level or with an Auckland level?
how the company's evolving its marketing and offer to incoming residents, or is it more or less
steady as you guys?
Yeah. We don't want Kevin to turn up and tell us that we're doing something crazy. Look, what that means is that we're just straightforward with people. We don't sort of deal with someone today, and then next week we tell them a different price and a different. People get sort of unsteady and not quite know where you're actually at. The other thing we don't do is say, "Well, we've got a year-end in March, and we've got a half year at the end of September." We don't offer unique deals to those residents. For example, we've seen in the market people offering free weekly fees for 2 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 2 years, but the other person is. Those sort of inequities, I don't think people really appreciate them, in terms of people living together and understanding of an element of fairness. We don't chuck down NZD 20,000 things here, weekly fee things there. We offer a really fair deal, 20% DMF, capped for life, fixed weekly fees, pricing that's fair, great range of care, great service. For people who are looking, we are absolutely up there in the choice that they will make. We really resist that sort of short-term stuff.
That's great, Gordie. Thank you. That's all for me.
Thanks. Jeremy Kincaid from UBS. Just following on from Stephen's.
Hi, Jeremy
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, 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 is strong. You've got 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 got to have happy residents so that that word of mouth spreads, so happy staff 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 dementia level care. Our view is that if you have a really terrific offering what we would see as arguably the best terms in the sector, clinical 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. In, 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 residential pricing and entering a village or having serviced apartment.
Yeah. I think it's really important that the Well, what we talk about the team is, it's really important to trust the process. Trust in what we do. That's the most effective way to ensure demand and a wait-list. I think that people don't really relate to a price with a big line through it saying "NZD 50,000 off" and that sort of thing. That's quite a different market, I think.
Okay, 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?
What it was, we assumed the liabilities of the residents. The capital sums they paid minus the deferred management fees, it is our obligation to pay those people out in due course when that happens. That was it.
Okay, great. Just also at your other site in Victoria, the sales appear to be going strong there. Are you able to give an indication of what the price point is there for that village? Where that sits relative to the surrounding villages?
Yeah. Dave, do you want to deal with that?
Is that Nellie Melba?
Yes, Nellie Melba.
Yeah. That chart that we showed, that is pretty much that, the difference. Obviously, Nellie Melba and Weary Dunlop in the same sort of geographical area, same market, in similar pricing because different offerings for what people look for. We're at about a 25% discount to the surrounding market there. The market has pulled back over the last six months. We've been able to maintain our pricing because of the buffer we've had there.
Okay, great. Then very lastly from me, David, your bank facility has obviously gone to NZD 1.7 million. Does that imply to the market that your modeling doesn't suggest that bank debt tracks above that level over the foreseeable future?
That's correct.
Fantastic. Thanks.
Yeah. It's quite an interesting conundrum for people if they move into Nellie Melba, they sold their house for, say, NZD 400,000 above, able to freed up, say, NZD 400,000 of capital. Because often for people in life, their house is their most major asset. Again, that grand opening night, quite a few people quietly said to me, "What do you do with NZD 400,000?" Because it's a quality problem that a lot of people have never had. Of course, if someone moved into a service department, you're looking at freeing up NZD 700,000. It's a great way for people to free up equity and downsize, and it really 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? Shall we just see if there are questions on the line? Thank you.
One question.
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Thank you. I had a couple of questions primarily around Australia. First was the Geelong project. I know that there was some, I guess, pushback in the community. Has that pushback experience impacted your evaluation for the 900 build rate?
I can deal with that question now. 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. What happened was the team and myself were at a hearing just before Christmas at the Greater Geelong City Council. The councilors 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 in New Zealand of the Environment Court, I guess. What happened is that 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.
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 townhouses from the scheme. That created a greater sense of space between the neighbors who were particularly affected, and it also created some more space in the village and didn't affect our feasibility materially. It was 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.
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 they've learned and can move more rapidly now?
We've actually assumed for some time that the majority of development approval processes may somehow go through VCAT. It's a very common process in Victoria, more common than not. It's great to have gone through our first process, which actually I thought was quite quick. The decision was turned down right at the end of December, and we had an answer pretty much by the end of April, fully sorted. 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 as a lesson learned internally because we can control that. 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.
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, or better than 10% will be in Australia at some point in time. You have a reputation with the community there as a place where the elders would also be natural them to put the capital to work there as well.
Yeah. Is the question whether we're considering listing in ASX?
Yeah. That's right.
Sorry, just missed the first bit. Okay. 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. 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. The other slight irritant is that the listing fees are huge, and they won't cut a deal. With ASX, I think we'll just leave that for the time being. We wouldn't rule out other exchanges outside of Australia.
Okay. All right. Thank you.
Thank you. There are no further questions at this time. I'll now hand back to Dr. Kerr.
Thank you very much 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. Thank you very much.