Ladies and gentlemen, welcome. My name is Mark Verbiest, and I'm the Chairman of Summerset Group Holdings. Today, we're very pleased to welcome you both in person and as online participants through our virtual meeting platform provided by our share registrar, Link Market Services. Welcome to our 2023 annual meeting. To maximize attendance, we are again providing the opportunity for people to join online. Online participants can are able to vote and ask questions e-online. I'll provide you with further instructions as we progress through the meeting. Also in attendance with me today are my fellow directors, Fiona Oliver, Dr. Marie Bismark, Venasio-Lorenzo Crawley, Gráinne Troute, Dr. Andrew Wong, and Stephen Bull. We also have with us our Future Director, Andrea Scown, our CEO, Scott Scoullar, and our CFO, Will Wright, and other members of our executive team are in the audience.
Now to the formalities of the meeting. The company secretary has informed me that the notice of meeting has been duly given to all shareholders and other persons entitled convened. We will turn to the formal resolutions during the meeting. I confirm that the requirement for a quorum for the meeting has been met. I therefore declare the meeting open. The agenda of the meeting today as you will hear from me, then our CEO, Scott Scoullar. You will receive updates from our board committee chairs. We will then proceed to the formal business of the meeting, which includes the resolutions of the meeting. Then we will have general business and shareholder discussion. Voting on all resolutions will be conducted by way of poll.
Shareholders in attendance online will be able to cast their vote using the electronic voting card received when your online registration is validated. If you would please refer to the Virtual Meeting Online Portal Guide, or you can phone the helpline at 0800 200 220. Questions from shareholders online will be taken through the virtual meeting website. To ask a question if you are a virtual attendee, please click on the Ask a Question box, either at the top or bottom of the webpage at any time during the meeting. Type your question into the form and click Submit. Your question will be immediately submitted. I encourage shareholders attending online who have questions to send their question through as quickly as possible.
Proxies have been appointed for the purposes of the meeting in respect of approximately 118.7 million shares, being approximately 51% of our issued capital. As indicated on the proxy form, I intend to vote all undirected proxies I have received as Chairman in favor of all resolutions being put to the meeting. I am holding up to 243,224 undirected proxies for each resolution. The results of the proxies will be delayed following the voting. The financial statements for the 12-month period to 31 December 2022, together with the auditor's report, are set out in the company's annual report, which you should have previously received. We will address any questions on the financial statements in the general business section at the end of the meeting.
It is my pleasure to address you today, this being my second annual general meeting as Summerset's Board Chair. Over the past year, Summerset has made significant achievements in delivering on our strategic goals despite the significant challenges that were driven by global, economic, and climatic events. New Zealand experienced its most difficult year combating COVID-19 in 2022, requiring continued precautionary restrictions on visitors to our Summerset villages and residents. Border closures for the half of the year meant that a much-needed migrant workforce was unable to be accessed to ease healthcare staffing shortages. Our economy was under pressure with increasing inflation, supply chain constraints, which have since improved, and a falling property market, all seemingly created, creating a perfect storm. One that we have been well equipped to deal with while maintaining focus on delivering value for our residents and our shareholders.
Our community's resilience was forcibly challenged by significant weather events throughout the country, but particularly in Hawke's Bay at the start of this year. This resulted in a heightened and urgent call for government and corporate leaders alike to be accountable and demonstrate their actions towards a sustainable future for the country. Summerset takes its commitment to sustainability seriously and has worked very hard to embed sustainability across the business. Over the last five years, we've significantly reduced our waste, become the first retirement village operator to obtain sustainability-linked lending. Introduced a science aligned emissions target and joined the Climate Leaders Coalition. We're at the end of our first five-year carbon emissions reduction target, and we are about to set another ambitious short-term target to continue the challenge to make ourselves do better.
Despite this backdrop, we continue to experience strong demand for our offering, assisted by a growing population aged 75 and over, and a desire for improved lifestyle, health, and a greater sense of community. We delivered more homes than forecast and continued to strengthen our development pipeline. In any year, these would be significant achievements, but against the challenges of 2022, they are even more so, and I must commend our executive team and Scott for these successes. A brief outline of our progress in the 2022 financial year, and which is fully detailed in our annual report, is as follows. For the 2022 financial year, we achieved an underlying profit of NZD 171.4 million, which was up 21.5% on the previous year.
A net profit after tax of NZD 269.1 million, which was down 50.5% on 2021, which really reflects a level of non-cash fair value movements more consistent with historical trends. The previous year was particularly influenced by the very strong property conditions that occurred at that time. We sold 537 new occupation rights and made 470 resales. That's over 1,000 new sales. Net operating cash flows totaled NZD 369.2 million. Our total assets now are over NZD 5.8 billion. Our debt gearing, which is currently sitting at 32.4%, which is significantly below the 50% loan-to-value ratio covenant level. Our core gearing ratio, if you exclude Australian debt, was 26.4%.
We made a total dividend payment of NZD 0.223 a share, which was up 20.5% on 2021. We built, constructed, and delivered 625 new units and 26 care beds built under our occupation right agreements, which was above our guidance. In 2022, we opened two new villages in Cambridge and Prebbleton and completed the new main building in our Kenepuru Village, which was our largest build to date and is the 6th of our villages to incorporate our state-of-the-art memory care center. Main buildings do form the heart of our villages, providing a vibrant community hub for residents, staff, family, and friends. We strengthened our development portfolio with the acquisition of two new sites in New Zealand, in Masterton and Fairy Springs and Rotorua.
As at the end of December, we had 18 villages under construction across 10 regions. Over 50% of all our retirement homes have been delivered since 2015. The steady state of our villages, once they are fully mature, are considerably more cash positive than what you see in our accounts. The steady state of our free cash flows are expected to be over NZD 230 million annually. As our business model has a heavy emphasis towards growth, our portfolio is correspondingly relatively young, and therefore, our shorter-term cash flows are not reflective of what you would expect to see when the portfolio is at full maturity. Over time, you could expect to see a significant uplift in resale gains and deferred management fees that have been realized, along with increases in care and village fees.
Summerset holds New Zealand's largest retirement village land bank, with potential to build a further 5,224 units and care beds, and we have been the top-listed retirement village builder in New Zealand now for several years. Against this year, our build rate means that we are also actually one of the top residential builders in the country. We're often left out of metrics that suggest that we're not in there constructing things. We are proud to be providing high-quality warm homes at reasonable prices for retirees, and we have the capacity, the consents, and the construction team to continue to do so for some time to come. In relation to Australia, our Australian business continues to move forward well.
Like New Zealand, we retain the ability to slow down or speed up the entry into this market as demand dictates. Australia's rapidly growing elderly population is forecast to see those aged 75 and over increase by 140% to 4.1 million people in the next 30 years. With the acquisition of two further sites in Victoria at Drysdale and Mernda out of Melbourne, we now have seven Australian sites giving us excellent capability, capacity looking forward with a land bank and potential capacity to build another 2,100 units and 450 care beds at an aggregate projected investment level of around NZD 1 billion.
Our first Australian retirement village in Cranbourne North is the most advanced of our properties, with construction having commenced now on our first villas recently and first residents projected to move in in early 2024. Our site at Chirnside Park was consented in early November following a unanimous vote by the Yarra Ranges Council. It is very pleasing to have secured the permit in under nine months, which now paves the way for construction to start later in 2023. In terms of operations, Summerset achieved a significant milestone in 2022, proudly celebrating our 25th year in operation. Across Australasia, we now have 39 villages completed or under development and a further 11 earmarked for development. We have more than 7,400 residents and 2,400 staff.
Our care offering and our continuum of care model is a very important part of why residents choose to live at Summerset. Residents want peace of mind that their needs will be met if their care requirements change while living in our villages. We've invested more in care this year. Our care center refurbishment program is well underway at Havelock North, Trentham, and Levin to ensure our facilities meet the needs and expectations of our residents, both now and into the future. On top of investing in new and improved facilities, we've invested in improving our residents' care experience further with our new Kaitiaki or wellbeing assistant roles, of which we now have 70 throughout the country, providing more one-on-one care for our residents to support them both physically and emotionally.
We're also using health technologies such as PainChek to improve the quality of life of our residents living with pain who are otherwise unable to verbalize their discomfort. Bringing the best of life is at the heart of everything we do at Summerset, and we continue to evolve our design and offering to give our residents meaningful and useful facilities. We also continue to test and invest in technology to enhance our residents' experience and lives, such as virtual reality, to allow our residents to travel to far-flung parts of the world, and our multi-ball interactive Exerplay walls. Along with many of our competitors, Summerset continues to be extremely concerned about underfunding in the wider aged care sector. Summerset is part of a group called Aged Care Matters that has spent much of the year lobbying government about the serious risks facing the sector.
More than 1,000 care beds closed in New Zealand in 2022, and with nowhere else to go, some of our elderly will fall back into the public health system, creating a further burden there. It is estimated that in 40 years' time, New Zealand will need over 12,000 more aged care nurses, 7,700 more dementia beds, and 15,000 more aged care beds. The current funding model is pushing the sector back to backwards, and there is no way we can currently see that New Zealand will meet the demand. In terms of our own services, we won't compromise on standards.
Our residents expect a high-quality care option if they need it, and we will continue to invest in and provide our care centers for them as they are an integral part of our offering to our target audience. The wider sector faces systemic challenges, and we do worry particularly about the not-for-profit part of the sector. As Chair, I would like to formally acknowledge my gratitude to my board colleagues for their commitment and governance over the past year, and it's been a pleasure to return to meeting in person again, making the most of the opportunities to visit our sites when doing so. We did see some changes throughout the year in our board composition. In November, we welcomed Andrea Scown as a Future Director.
This is a program introduced by the Institute of Directors, which aims to help develop New Zealand's next generation of directors and provide experience in high-quality companies around the country. Andrea is CEO of Mitre 10 in New Zealand, so we're getting the benefit of her experience from another sector. Future directors participate fully in board matters but don't have voting or decision rights. Director and Audit and Risk Committee Chair, Anne Urlwin announced her retirement from the board effective 28 February. Throughout Anne's nine-year tenure, Summerset has grown to be the second largest retirement village operator in New Zealand, going from 18- 39 villages, more than doubling resident numbers and expanding into Australia. I'd like to especially acknowledge Anne's contribution to the board of Summerset and wish her well.
Following Anne's retirement, we were pleased to appoint Fiona Oliver to the board and as Chair of the Audit and Risk Committee. Fiona brings significant commercial and governance expertise to Summerset and valuable insights and skills to our business. I'd also like to acknowledge and especially thank our residents for choosing Summerset, our staff for their professionalism and the high quality of care they provide, as well as their commitment, and our shareholders for your continued support. In terms of looking ahead, we remain optimistic and are well prepared to deal with the uncertain economic period in 2023, which we seem to be experiencing. We intend to continue to grow.
We have a prudent capital structure, we can flex our build rate as demand dictates, and we are focused on our cash generation, and as such, we'll closely continue to monitor our costs during the current period. I'd like now to hand over to Scott, our CEO, to address the meeting.
Thank you, Mark. Good afternoon, everyone. I would just like to focus predominantly in the speech on the achievements in 2022. Firstly, I wanted to just reflect on the significant weather events we had in the Hawke's Bay and North Auckland, Northland earlier in this year with Cyclone Gabrielle. These were unprecedented events in the way in which the speed in which our emergency response team deployed support throughout that period for our village residents, for me, was particularly humbling. I'm particularly proud of our staff on the ground and the work they did with the support of staff from around the country flown in to assist, really. We, we not only had people on the ground, but we had significant number of staff flying in from around the country to help out.
In terms of the specifics of that, there was a couple of things I think that also came to highlight. There was a bunch of things really for us. It was helping out with messages for loved ones who were unable to contact family throughout that period. Providing simple things like hot meals for our residents, drinking water, clean linen, and even clinical supplies to our care centers. Six of our villages were affected. Northland, Waikato, Hawke's Bay were all affected with power cuts. Our Te Awa village was evacuated as a precaution due to the flooding event by civil defense. We were really pretty fortunate that none of our villages were flooded. While this was, of course, a very tough and stressful time, it also showed the amazing community we have at our villages.
I've never personally seen our main buildings and our recreation facilities more busy. They were a place for residents to meet, to connect with one another, also for pop-up charging stations, simple things like charging cell phones, and to share in a hot drink at times or even a meal. That was a pretty special time for our residents to not only be able to sort of help them, but also for them to sort of share, those experiences with residents, other residents within the village and spend time together. Summerset also established a NZD 250,000 disaster relief fund to support Summerset staff directly affected by Cyclone Gabrielle.
We used this fund to make contributions to staff who needed help getting back on their feet, managing the impact of their lives, and replacing items that were damaged for them personally during the storm. The fund was also to help our people with any financial burdens that they incurred through Cyclone Gabrielle, additional bills, additional costs that they experienced. Look, just now turning to some of our 2022 highlights. Mark's touched on a lot of these already, but for me, a record 1,007 new and resale settlements for the year was pretty good given the impacts of Cyclone Gabrielle. Not so much Cyclone Gabrielle, sorry. The impacts of COVID and Omicron throughout that year.
A record year of construction with the delivery of 625 homes and 26 care beds, which was above the guidance level that we provided. The addition of a four further village sites to our significant land bank, giving us the pipeline and the flexibility really to grow both in New Zealand and continue that pathway of growth in Australia, which we've started on. The completion of civils and earthworks at our first Australian village and also the consent for our second village as well in Australia, which is actually ahead of schedule for us. Our annual resident satisfaction survey, which was 95% for those living independently and 94% for those living in our care facilities. Look, now I'll just take the opportunity to focus separately on some of the key areas of our business and performance during 2022.
The first area I just wanted to talk about was life in our villages. This was another challenging year for residents, and the ongoing COVID-19 pandemic changed the landscape again with the arrival of the Omicron variant. We had extremely high levels of vaccinations in our villages, so we were really well prepared going into that. However, the need to lock down parts of our village and cancel communal activities at times was also equally very tough on residents and well above what we'd experienced in prior years. Our frontline staff were inspiring, caring for people in these challenging times, keeping them informed, and also helping them to connect with both family and friends. Influenza immunization was prioritized for those vulnerable groups, and we ran clinics on site really for both residents and staff through that period.
COVID-19 also made us think and work differently to provide meaningful and engaging activities to our residents. We made virtual events and activities accessible online to residents throughout the country, such as our Summerset Sessions program, which created some really enjoyable and memorable moments. The second area I just wanted to touch on was the growth in our portfolio. Our design and consenting program is very well-positioned in New Zealand. We've got 76% of our land consented, ready to go in New Zealand. And in addition, we also maintain very strong levels of product and geographic sort of diversification across the country with building over 18 sites. As part of a strategic review of our building program, we made the decision in December to put our proposed Parnell Village on hold.
Construction costs have escalated significantly, with a declining property market, we considered that's the most prudent thing to do, was to sort of have a strategic review of that over coming months. We applied and were approved to use the fast-track process for our Half Moon Bay site in East Auckland, I should say, which I'm pleased to say that came through successfully for us. We also completed construction of our Kenepuru Village center building, that was over a NZD 50 million investment to that village. Along with service departments and the care center, it also has one of the country's most modern, innovative facilities for people living with dementia in New Zealand. Many of us have had direct family experiences with dementia, the statistics are, you know, pretty staggering, really.
70,000 people in New Zealand are living with dementia at the moment, and that's set to lift to about 170,000 by 2050. You know that for New Zealand is, you know, quite a big challenge for the years ahead. That's why, look, for us, similar offerings are set to be completed in our next three main buildings that we're delivering this year, at the end of this year, which is our Te Awa Village, our Pāpāmoa Village, and our Bell Block Village. The third area of 2022, which I just wanna touch on, is cost and procurement management. We've worked hard to secure long-term contracts as a business with our procurement program, which gave us certainty during this time of inflation and price volatility.
Our planning and supplier re-relationships have meant that we've kept a tight lid on construction costs over the last year. This obviously led to a good development margin. You'll see development margins just under 30% at 29.7%. However, many of our contracts we've acknowledged are coming up for renewal this year, so you will have noted in the forward forecast that we've got an expectation of a development margin in the year ahead, formal guidance of 20%-25%. We're also seeing costs such as rates and insurance increasing. Like any other business, we, you know, have those same challenges.
Unlike many of our competitors, we don't fix our fees, though, it means we have some ability to flex our fees to meet some of these costs while sticking to our commitment to our residents to not increase fees beyond the increase in NZ Superannuation. The fourth area I was just wanting to touch on is demand. In 2022, we sold a record 1,007 occupation rights, which I mentioned before. Really feel we're pretty well placed with 88% of our portfolio priced below the median house price. We still feel like the product is highly affordable for New Zealanders. Additionally, in Auckland, our average two-bedroom homes remain at around 80% of that median house price. Across other main centers in New Zealand, this is approximately 89%, for the rest of New Zealand, it's 95%.
The vast majority of stock is still priced below median house price. This makes living in a Summerset village still very affordable for the average retiree, and we deliberately have a cushion here to protect ourselves against market fluctuations. The fifth area to discuss is associated with people. Our people are an integral part of our business and everything that we do in Summerset. We're very proud of them and the work they do throughout our business. We're committed to the protection and promotion of the health and wellbeing of all our staff. We've surveyed our staff to build our knowledge around their own personal wellbeing and supplemented this with a series of wellbeing improvement workshops. We've promoted and delivered resilience training, mental health awareness to the majority of our frontline workforce through programs including Mindfulness Month, Mental Health Awareness Week, GoodYarn, and MATES in Construction.
We remain committed to creating safe work environments for our people and ensuring that we, as leaders, are leaders in health and safety. During full year 2022, we started developing a new 3-to-5-year strategy, which we'll be finishing in the coming months. It is paramount our sites are safe, and to this end, we continue to use SiteWise prequalification as well as quarterly external Site Safe audits to check our performance against best practice, essentially. All these measures are in addition to the extensive processes and practice we use to manage the health and safety of our residents and our staff in our villages. Sadly, we had the first death on one of our construction sites in November last year when one of our contractors died following an incident at our St John's site. This, of course, was devastating for us as a company.
WorkSafe New Zealand are completing their investigation into the incident. We've cooperated fully with them throughout this time. We will assess their report when it's completed and look at recommendations that we can make going forward to improve. The last area associated with 2022 I would like to discuss is the ESG reporting. Summerset's ambition is to develop, build, and manage more sustainable retirement villages in both New Zealand and Australia. We've moved past the going green phase to now thinking green right across the company. One of our biggest areas of focus have been waste reduction in our construction businesses. Our construction teams have worked extremely hard to identify where we can better manage construction waste. We've teamed up with Waste Management New Zealand to look at all aspects of waste across our sites.
We've installed solar panels also separately at our Nelson site and recently at Karaka. We intend to roll out solar on our main buildings, essentially on all of our main buildings going forward. Looking forward, we've built a strong foundation and are well prepared to flex when tough market conditions necessitate it. As at 31st of December, our bank facility had undrawn capacity of close to NZD 500 million, which provides us with sufficient headroom to fund growth. We saw strong demand for our recent retail bond issue of NZD 175 million. We had close to NZD 50 million worth of over subscriptions.
A key protection mechanism for Summerset is that the value of our development assets exceed the value of our debt by $234 million, meaning that if we sell our stock down, we have no core de-debt left in the business. While challenging labor supplies continue to exist, product supply challenges have improved. We remain on track for our 2023 build rate guidance of 625-675 new homes. Once our current villages under construction are completed, this is predicted to generate, as Mark mentioned before, over $250 million in excess cash after build costs to those villages are repaid. I'd just like to say thank you now, and I'll hand back to Mark.
Thank you, Scott. Must be a bit taller than me. I've asked each of our board committee chairs to make some brief comments on their committees and the work completed over the last year. Fiona chairs the Audit Committee, Stephen, the Development and Construction Committee, Anne Marie, the Clinical Governance Committee, and Gráinne chairs the People and Culture Committee. Fiona, if I could ask you to come up first.
Kia ora, Mark. Tēnā koutou katoa. [Foreign language] Good afternoon, all. I'm Fiona Oliver. I chair the Summerset Audit and Risk Committee. You'll also be hearing from me later in terms of my re-election as a director. Having only recently been appointed as Chair of the Committee, I'd like to also acknowledge the work of and thank my predecessor, Anne Urlwin, who retired from the Summerset board in February this year. I'd also like to thank Grant Taylor, who from Ernst & Young, who's not here today but has retired as our Audit Partner. Thank you, Grant, for your work. Could I also acknowledge our Sarah Theodore, who joined us in September last year as Head of Finance. Also welcome Sam Nicolle as our new Audit Partner. [Shabib], thanks for your continuing work.
During the last 12 months, the committee's mandate was extended to include responsibility for the company's risk management framework. It was renamed from the Audit Committee to the Audit and Risk Committee. That means that in addition to overseeing the integrity of Summerset's financial systems and processes, we'll also be responsible for the scrutiny of the risk management framework. Here's a little bit more detail about what we've done in the last 12 months, and it's including working with our auditors, Ernst & Young, in terms of compliance with our half year review and full year financial reporting obligations, including the robustness of our financial disclosures and assurance of the underlying profit metrics. We also worked with Ernst & Young in terms of our reporting to the statutory supervisors.
We worked with KPMG, who are our internal auditors, who go over some of the processes and systems in our business to ensure that they are also robust and done a number of areas there, but in particular privacy, treasury and business continuity. We've also completed the preliminary work for the new XRB climate risk-related financial reporting, which we will report on in 2024 for the 2023 year. In addition to all of that, as a committee chair, I'm responsible for reporting to the full board on all of that work on a regular basis.
Look, in my short time as chair of the Audit and Risk Committee, I've been very impressed by the capability of the team, and the integrity of the underlying processes and systems that support the committee's reports and very much looking forward to working with the wider management team and the committee during this financial year. Thank you.
Thanks, Fiona. Are these mics working? Yes, they are. Stephen, you could probably report from there.
Can you hear me? How's that?
Yeah.
All good? All right. Good afternoon, everyone. It's a pleasure to be here with you today and to be able to provide you with an update on the work of the Development and Construction Committee of the board. By way of background, I joined the board in March 2022, and took over as chair of the committee shortly thereafter. As you can probably tell, I'm an Australian-based director. I like to get that out early.
Development and construction is a significant part of the Summerset business, as you know. The many achievements of the group in this area have been outlined by Mark and Scott in their updates, and I don't propose to go over that detail. Suffice to say, it was very pleasing this year to see the business deliver on its targets in what has been, as everyone knows, an incredibly challenging environment. The role of the Development and Construction Committee is to provide governance and oversight of the group's activities in this space. To this end, I wanted to point out key four key focus areas that we looked at in some detail this year. Those four areas are firstly, continuing our focus on health and safety. Secondly, oversight of our investment decisions in what is a changing economic environment.
Thirdly, ensuring the establishment of robust design, procurement, and construction processes in our Australian business. Finally, ongoing review of our design delivery, processes as they apply to environmental, social, and governance frameworks. Continuing our focus on health and safety. At every committee meeting, management present on our ongoing health and safety performance, including measurement of key metrics, trends in this area, and initiatives to support the team to maintain our focus. This is a critical area for the group and the committee. Committee meetings were held both in our head office but also out on our construction sites. This enabled members of the committee and the broader board to see firsthand the activities in this space. This is a really important part of good governance.
A strong health and safety culture is critical to the business, and openness and transparency are a vital part of that. It was really pleasing to be able to spend some time with our people on site to get a real understanding of how that openness and transparency translates through the workforce. As Scott mentioned, we saw the tragic death of one of our contractors on one of our sites this year. The committee has been working with management to ensure this transparency and openness flows through the investigation of WorkSafe New Zealand. Secondly, we took a real interest in oversight of our investment decisions as they pertain to development and construction this year. The last year saw a deterioration in many economic conditions.
While none of this is specific to Summerset, we saw significant increases in construction costs, multiple interest rate rises, along with resourcing and supply chain pressures. This made it more difficult for us to secure resources and people to deliver on our village program. As a result, we had to be more prudent in our decision-making on buying land and starting projects. The committee introduced new decision gates to ensure the financial robustness of these decisions. This can be seen in the group's decision to put our Parnell project on hold, as Scott mentioned. All land acquisitions are also scrutinized by the committee in light of our broader strategic and financial objectives. This, coupled with the group's strong long-term strategic approach to managing costs and its supply chain relationships, has held us in very good stead through these challenging times.
We anticipate ongoing broader economic challenges in the short term, so strong governance and management will be important to ensure the group continues to be well placed to deliver on the results that Mark and Scott spoke of earlier. Thirdly, it was really important for us to ensure that we established early on in our Australian journey, robust design, procurement, and construction processes. As you know, the group has a strategic objective to grow our business in Australia. The entry to any new market brings both opportunities and risks. The committee was very focused this year on working with management to ensure that our operations in Australia are established early, especially in light of the fact that we are employing a different procurement model there than we do in New Zealand.
Our general manager of our Australian business attends every committee meeting and presents on our pipeline and activities in Australia. The full board visited Australia recently to meet with the team and visit our sites to see firsthand how our operations are performing. What was really pleasing in meeting the team in Australia was the real mix of people with deep Australian experience, also people from our New Zealand business who have relocated to the Australian business. I think that mix of deep local knowledge combined with a deep cultural understanding of the Summerset business is really important to our success there. I wanted to touch on our ongoing review of our design and delivery capabilities in relation to environmental, social, and governance frameworks.
We have seen more than ever over recent years the impact of environmental and social issues on the long-term landscape, whether that be floods, cyclones, fires, pandemics, these are but a few. The committee has taken a strong interest in the group's design and construction thinking and processes to ensure we are addressing these issues in all of our decisions. Those decisions include where we buy land and the depth of our due diligence through the acquisition process, to how we design our villages, to how we manage our construction processes. All of these things are critical to delivering sustainable villages.
It has been really pleasing to see management team presenting to the committee on new developing construction techniques, the rethinking of the design of our main buildings and care facilities, and ensuring our villages are considering the changing environmental and social landscape. All in all, a very strong year in what were difficult in a difficult environment. Personally, I wanted to thank the other members of the committee and also Scott and the management team for not just delivering great results this year, but also the way they went about in delivering those. A big thank you from me. I'll now hand over to Dr. Marie Bismark.
Thank you. Tena koutou, tena koutou, tena koutou katoa. [Foreign language] Wonderful to be here with you all this afternoon. My name's Marie Bismark. I'm the Chair of the Clinical Governance Committee. When I'm not here on the Summerset board, I work as a doctor in a mental health clinic in Kapiti. I usually see around 8 to 10 patients a day, and with every patient I see, I apply the mum or dad test. Would the care that I'm be providing be good enough for my mum or dad? Now, that's a tricky enough thing to do when you're seeing 8 or 10 patients in a day, but imagine what it's like when you're responsible for the care of 7,500 residents, which is the responsibility that we have here at Summerset. Now, I want you to imagine something else.
Imagine that you're 80 years old, you have Parkinson's disease, you're a long way away from your home, and you have a fall, and you break both of your arms. When you wake up, your arms are completely immobilized, so you can't even scratch your nose or brush your teeth or eat a sandwich or go to the toilet independently. That was the situation that my dad found himself in just before Christmas. The social worker in the hospital after his surgery recommended that he have four weeks of respite. Given the crisis that we've already heard about in aged care in New Zealand, we were incredibly grateful that there was a respite bed available and even more grateful that it was in one of our Summerset villages.
All of a sudden, that is it good enough for my mum or dad test was not hypothetical at all. That was the reality that they were living. My dad had 4 weeks in a Summerset village. It was really wonderful to have that time to get to know the nurses and caregivers who we employ within Summerset and to see the compassion and dedication that they bring to work every day. It was particularly wonderful to realize that one of dad's nurses had actually started work as a caregiver with us at Summerset and had been supported through her nurse training to become a nurse. We're really proud of the staff that we employ, that we pay our nurses above the sector average, and that we support their training and professional development.
As the Chair of the Clinical Governance Committee, it was really wonderful to see firsthand all of the attention to keeping my dad safe from harm. His surgical wounds were checked regularly. The nurses came round with medications three times a day. We know that medication errors are a really high area of risk for our business, and it was great to see some of the initiatives that we've supported in play. For example, the nurses wear vests saying, "Do not disturb," to try and make sure they're able to focus on that task of giving medications safely. We're really proud at Summerset that we help to coordinate a national benchmarking scheme for aged care providers, and we've really been able to see the difference that that has made with a significant reduction in medication errors.
Some of the wonderful initiatives that we've had is we now have electronic prescribing and dispensing of medications. We employ an in-house pharmacist who helps to make sure that medications are given safely, but also to make sure that people are not taking unnecessary medications that they don't need. As you all know, we're still living in a global pandemic. It was really reassuring to know that all of our staff were fully vaccinated. They were wearing masks. There was extra air filters in place. Family and friends were RAT tested before visiting, and that helps to keep our residents safe, but also helps to protect our staff in the work that they're doing. Clinical quality is about so much more than just safety and keeping people safe from harm.
The staff at Summerset all knew my dad, the names of his grandchildren, the fact that he loved movies, which is a good thing, 'cause when you have two broken arms, watching movies is about the only thing that you can do. He really enjoyed the village activities, and it's so wonderful that we've created new kaitiaki roles in our villages to help ensure that residents receive that kind of personalized attention and care. My dad really appreciated the Summerset experience, and he was not alone. We're so proud to see those patient satisfaction rates of around 45 or around 95% among our residents. Finally, I just, you know, want to express my enormous thanks to the team, to the other members of the committee, to Eleanor and Linda, to all of our clinical staff for the amazing work that we do.
At our committee and board meetings, we receive reams of reporting. We spend hours on strategy and on care improvement. In the end, it's really the humanity of our people that makes all the difference. As my dad was leaving Summerset, two caregivers stopped him, and I thought maybe he'd left something behind or we'd forgotten to sign a bit of paperwork. They just wanted to make sure that he had a hug before he left. I think that's really the heart of Summerset. This is my 10th AGM for Summerset. I've stood here every year and said that we aim to have care that's good enough for our mums or dads. This year, I can put my hand on my heart and tell you that it really is.
We'll keep listening, we'll keep learning, we'll keep trying to improve that care. Thank you to all for your ongoing support.
Gráinne.
Yeah, thanks, Mark, and thanks, Marie. I always hate following Marie in these addresses. Kia ora koutou, everybody. It's been my privilege this year to chair the People and Culture Board Subcommittee, and I'm pleased to provide this update to shareholders. The committee, previously known as the Remuneration and Nominations Committee, is responsible for assisting the board in establishing and reviewing remuneration policies and practices, culture, leadership and capability, succession, employee development, inclusion, diversity, and engagement. Specifically, the committee's objectives include supporting the board in ensuring Summerset's policies and commitment to people strategy are aligned with and enabling of the broader business strategy. Assisting the board in planning its own composition. This includes evaluating the competencies of prospective directors, oversight of the search and appointment process, and making recommendations on future board succession. Overseeing the board's annual self-assessment.
Assisting the board in monitoring remuneration market best practices, establishing remuneration policies, and setting and reviewing the remuneration of the CEO, the leadership team and directors. During FY 2022, the committee met formally six times with several shorter supplementary teleconferences on specific matters. Over the course of these meetings, the committee considered papers from management and others on clinical workforce challenges and strategies, which has already been noted by pretty much everybody else, is an area of particular and ongoing strategic concern. Diversity and inclusion, staff wellbeing, learning and development, staff engagement and turnover levels, talent and succession, and of course, papers on remuneration. The committee continually considers the components of executive remuneration to ensure ongoing alignment with shareholder interests and strategic priorities. In addition, this year, an externally facilitated board review was completed.
This review highlighted many positives, particularly in relation to the board's commitment to the company and Summerset's residents. The breadth and diversity of capability around the table, the balancing of shorter and longer-term priorities, and effective and open meeting dynamics. From an opportunity standpoint, while the practical implementation of succession planning has been relatively smooth in the last couple of years, we've seen the transition of both the CEO and chair roles as well as two director roles. There is an opportunity for us to be even more planful and strategic in our approach to the topic of succession. How we best do this will be on the committee's agenda over the coming year. Once again, it has been my pleasure to chair the committee.
I very much appreciate the work of Scott and the entire management team, as well as the energetic and robust contribution of Mark, Marie, Vena, and Anne as the other committee members. We're all deeply aware that it is people, he tangata, [Foreign language] that enable everything Summerset delivers to its residents and shareholders. Thank you all, ngā mihi. [Foreign language] I think I'm handing back to you, Mark.
Thank you. Thanks, Gráinne, and thanks to all of you. Ladies and gentlemen, we now come to the matters requiring formal resolution as outlined in the notice of meeting. There will be an opportunity for shareholders to ask questions on each formal resolution being put, and I ask that the questions you raise should re-relate directly to the matter being considered. As I said earlier, I will give you the opportunity to ask more general questions later. When I call for questions, can shareholders present in the room, please wait until a microphone is provided to you and clearly state your name before asking the question. I will take questions from those present first before moving to any questions that are submitted online. If you are online, you may ask questions on each matter being put to shareholders through the virtual meeting website.
Please start submitting your questions on these resolutions now, as there may be a small delay in us receiving them. If your question is received late, we will certainly respond to you separately after the meeting. I will call a poll in relation to all of these resolutions. In terms of the voting process, shareholders joining us here in the room today, you will have been given a shareholder voting card. If you are a shareholder and did not register on arrival and wish to vote, please make your way to the registration desk outside the room and the Link staff will assist you. Please mark your voting intention for each resolution and the voting cards will be collected at the appropriate time. Shareholders in attendance online are able to cast their vote using the electronic voting card received when online registration has been validated.
To vote online, you will need to click Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate, then please mark your voting card in the way that you wish to vote, either for, against, or abstain. Once you've made your selection, you can then click Submit Vote at the bottom of the card to lodge your vote. Voting will remain open until 5 minutes after the conclusion of the meeting, and the results of the vote will be announced through the NZX and ASX. If you're participating online and require any assistance, please refer to the meeting portal online. There is a guide or use the helpline, as noted.
Each of the resolutions set out in the notice of meeting are to be considered as an ordinary resolution, and as such, must be approved by a simple majority of votes cast by shareholders entitled to vote and voting on the resolution. The outcome of proxy votes will be displayed for your information after voting on all the resolutions has occurred. If I can turn first to the matter relating to the company's auditors. The motion concerns the fixing of auditor remuneration and seeks shareholder approval that we, as directors, be authorized to fix Ernst & Young's remuneration. Are there any questions on this resolution? No? Okay, if you could please now select either for, against, or abstain for Resolution 1 on the voting card. Resolution 2 concerns the re-election of Dr. Andrew Wong as a director of the company, Andrew having retired by rotation.
The board recommends unanimously Andrew to you as a Summerset director and supports his re-election. Andrew, if you would now please say a few words about your re-election, please.
Hello? Yep, thank you. Thank you, Mark Verbiest. Good afternoon, everyone. My name is Andrew Wong. I'd like to thank shareholders for the opportunity to stand for re-election. I've been a director of the company since 2017, and at the moment I also sit on the Clinical Governance committees and the Development and Construction Committee. I have a broad range of experiences and qualifications that I believe assist me with these roles. I initially trained as a doctor specializing in public health medicine, but have spent the last 30 years of my life in governance and see the senior leadership roles in the public and private health sectors here and overseas, particularly out of note in Australia.
This has covered everything from owning and operating and running private hospitals, day surgeries, rehabilitation facilities, diagnostic imaging businesses, care management businesses, cancer and cardiac centers, and the development of healthcare facilities. We've done things such as buy businesses, merge businesses, sell businesses, turn them around and grow them, all in the framework of a clearly articulated strategic direction. I'm currently the managing director of a private healthcare operator and investor, which has a portfolio of 25 businesses in these areas. Since being first elected onto the board, the business has grown significantly, not just in the number of villages or their style, but also in the number of residents, the number of staff, and the complexity and the challenges that the business faces.
A really good example of this is the challenges that have recently been thrown up by the global pandemic, COVID, and more recently, the impact of climate change, as we talked about with the Cyclone Hale and the impact that it's had on our upper North Island villages. Other issues we continue to grapple with are securing the right workforce and the ongoing funding of care by the government of New Zealand. I would like to take this opportunity to commend the village and care staff who've shown time and time again over the last few years their resilience and how they've gone well above and beyond, particularly with regard to the care of our residents during the pandemic and more recently, the cyclone.
When you talk to them, it's pretty clear that quite often they've put the care of the residents and their health and safety well above their own. It is, despite all of these challenges, a very exciting time for the business. We face a period of time where the very definition of care and independent living is continuously changing, and the business will have to adapt and grow towards these challenges. New technologies are coming along all the time, and this is not just in the care sector. Artificial intelligence, the ability to use the data we collect to predict who will be well and who might not be so well, but also in the construction side of the business as well in terms of what we can do.
The biggest challenge that we're facing at the moment is how we expand rapidly the business, particularly as we grow into Australia and find the right people, the right numbers of people, and put in place the right governance and management to actually successfully deliver on all of this. It's been an incredibly challenging but incredibly rewarding 6 years, and I would really welcome the opportunity to continue to use my experience and insights to help deliver success for the business and all of its stakeholders. Thank you for the opportunity. Mark.
Thank you, Andrew. I would now like to propose that Dr. Andrew Wong be re-elected as a director. Are there any questions or discussions? Discussion requested on this resolution? No? Thank you. If you could now therefore, on your voting card, either select for, against, or abstain on that resolution. Resolution 3. The next resolution, it concerns the reelection of Vena Crawley as a director of the company, having retired by rotation. The board recommends Vena to you as a Summerset director and unanimously supports his reelection. Vena will now say a few brief words about his background.
Mark. Good afternoon. Talofa lava and kia ora koutou. [Foreign language] I'd firstly like to thank you for allowing me the privilege to serve you, our people, our residents, and our stakeholders. This directorship, for me, it was not a by-accident role. It's not a role that I took just to help me transition from my executive career into my new directorship world. It wasn't just a job I took because it was offered to me. I chose this sector and this role because it's inbuilt in my culture to look after our elderly. I chose this role because my values align to a sector that is designing to help take care of those for whose shoulders we all stand on.
I chose the aged care sector because the commercially savvy businessman in me knows that if we can continue to build a successful business, we can all together help look after more people. As a member of the Development and Construction Committee, as a member of the Audit and Risk Committee, and as a member of the People and Culture Committee, I proudly contributed to the running of our business and the growth of Summerset during pretty turbulent and challenging times. We're in the midst of it, and our work is not done. There are congruent and confluent crosscurrents. We've heard them all before.
There's persistent inflation, interest rate uncertainty, cost of living crisis, climate change, market volatility, rising supply costs, labor shortages, the impact of lower property valuations, whether you're residential or commercial, living longer, and the cost of long-term care, the uncertainty around our health system, which I see through my board role on Te Whatu Ora. Better equity. The significant wave, of course, there is a huge wave of baby boomers who are now starting to think about and come into the retirement bubble. Let's not forget the constant loom of this recession that sits above us. These crosscurrents represent risks and challenges, but also a lot of opportunities.
Opportunities to ensure we build change-able business models, develop new products to expand ways to serve our customers, maximize the assets we have, adopt an innovation mindset to prioritize growth, redesign offerings for new markets, of which there are plenty, to reimagine customer engagement and experiences that are human-centered. The last 20 years of my executive career created the ideal skills that helped me to co-design opportunities from risks and challenges. As a transformation and profitable growth specialist, I'm well-versed at delivering growth and operational efficiencies. I'm versed at delivering a lot from very little. I have an innate understanding of predictive shifts in both consumer and societal needs and behavioral changes, that has allowed me to see around corners.
The technologist in me can layer customer-centered design, business process, and data analytics to maximize existing technology, as well as navigate the change to adapt to new or unfamiliar technologies. I believe the blend of these skills are needed now more than ever. With your support and endorsement, I'd like to continue to proudly assess the stewardship of Summerset, so we can collectively bring the best of life for our people, our residents, and our shareholders. Thank you.
Thanks, Vena. I now would like to propose Vena be reelected as a director of the company and ask if there is any questions or any discussion on this resolution. No? Okay. If you could turn to your voting cards and vote for, against, or to abstain on that resolution. The final formal resolution relates to the reelection of Fiona Oliver as a director, having been appointed during the year by the board by way of casual vacancy and holding office until this meeting. The board recommends Fiona to you as a Summerset director and unanimously supports her reelection. Fiona, if you'd like to say a few words, please.
Kia ora koutou. Again, good afternoon, all. I was delighted to be asked to join the board and work with a very committed group of people who make up the board and the management team and contribute to the company.
We can't see you.
Didn't think so. There we go. Okay, let's start again. Kia ora. Good afternoon, all. I was delighted to be asked to join the Summerset Group Holdings Limited board and to work with a committed group of people who make up the board as well as the management team and contribute to the success of the company. Before I talk a bit about my background, I wanted to briefly mention a couple of the principal motivations for joining the board. There are a number of attractions to joining the good work of this company. Two of them, for me, in particular, are its clarity of purpose, which has been referred to by my fellow directors and Scott earlier, bringing the best of life and its values.
To deliver on the purpose, Summerset relies on two core beliefs that underpin its values. The first is that people must be at the center of its operations. Secondly, that to create long-term value, decisions must be made with a clear understanding of the impact of these decisions on our key stakeholders. These concepts are indeed aligned to what I believe is pivotal to a company's success. In my short time with the board, it's evident to me that the interests, safety and care of the residents of Summerset, as well as its employees, are core to the thinking of the company. In addition, the importance placed on our responsibility for your investment in Summerset is highlighted by the very sound environmental, social, and governance policies and practices embedded in the organization.
My governance experience has been gained across a broad range of business sectors, from renewable energy to infrastructure, to technology and sport. Before a career in governance, I held an executive level commercial roles in a very competitive and highly regulated industry, where success and reputation depended on products and services that genuinely reflected the needs of its customers. Prior to being in management, I practiced as a corporate lawyer, specializing in mergers and acquisitions. In my role as a director of Summerset, I undertake to bring my experience in capital management and productivity, financial management, significant infrastructure project sponsorship and management, mergers and acquisitions, capital markets, customer centricity, regulation and regulatory frameworks, and risk management to benefit the already astute and effective oversight by the company of the Summerset board.
It would be a privilege, and I would welcome your support as to re-elect me as a director of the board. I'm very happy to answer any questions you may have of me. Thank you.
Thank you. Are there any questions or discussion in relation to the re-election of Fiona as a director? Nope. Okay. If you could again turn to your voting card and vote for, against, or abstain on that resolution. Right. At this time, I'd like to advise the outcome of proxy votes that were lodged in respect of each of the resolutions. I won't read the results for each resolution, they are up on the screen now. Link Market Services will move through the room to collect your voting cards. For those shareholders online, you can now submit your vote. Your voting will be open until five minutes following the conclusion of the meeting. Result, results of the poll, as I said earlier, will be announced on the NZX and ASX after the conclusion of the meeting.
I'd now like to give shareholders the opportunity to ask questions, whether related to the presentations, the financial statements, or the management of the company. You can continue to provide questions online. We will address questions already submitted online. You may ask follow-up questions by submitting a further question online. We'll allow quite considerable time for your questions. If we do run short and are unable to answer your question online today, we will endeavor to respond after the meeting. Are there any questions from shareholders? Yes. Can we have a microphone to the lady sitting in the third row? Thank you. Hello. If you could please tell us your name and-
Yes. I'm Joy McNicol, and I've just got a policy question. If I was in a self-care apartment or townhouse, and I got carted off to hospital, and they chucked me out at 1 A.M. in the morning, not being able to care for myself, what would be the response of Summerset? Would they be able to place me or take me back to where I had been and drop in and see how I was faring? Basically, do you include extras like that when something really goes wrong?
We try to, but Scott, you're probably in the best position to answer that.
Hi. Hopefully you can hear me okay. We do. If you're in independent living apartment, essentially you can request some additional services and additional support from us. That could be anything from medication support through to helping you get up in the mornings. There's a bunch of stuff in there, like it probably depend on your particular circumstances as to whether, you know, you would be able to continue to live safely within your own independent living home or whether we would need to look for a placement with you within our care center, sort of depend on that situation. If you're living independently, there is a range of services and support we can provide for you.
You obviously have a call bell system, so if you're in distress, post coming home, you need some support. We're obviously available from a care center perspective to also help you.
You would open up the place at 1:00 A.M. when the ambulance brought you back and assist with getting checking on me, say, at 5:00 A.M. and 9:00 A.M. that I was okay before you decided what you could do with me, seeing I was going to need a bit more than someone popping in to see me and that I was okay.
Yeah, sure. Look, at those situations, normally you'll find that there's a handover process that will sort of happen between the public hospital and with us, and so there'd be sort of those sort of discussions between the hospital and our staff on-site as to kind of what support you would need. I'm not necessarily sure that happens all the time, depending on obviously what DHB it is and what public hospital it is. I think through those discussions, there would be the opportunity to kind of talk about what support you needed and what assistance you needed. It's fair to say we wouldn't typically be able to provide that degree of active support living independently. You'd probably more often than not need to come into the care facility.
Right.
A bit hard to judge. Look, in all honesty, it's hard to judge without knowing your specific circumstances.
But you would if I returned from hospital unplanned -
Yeah.
- at 1:00 A.M. in the morning because they'd chucked me out. This is what one of the local hospitals in this wider area did. You would have someone drop in and see that I was okay at 5 A.M. or 6 A.M. in the morning.
Yeah. Look, and to answer your question before, you'd absolutely have direct access to come back into your home as well. You know, it didn't matter whether it's 1 o'clock in the morning, 3 o'clock in the morning, you'd have access and support to get the ambulance to come bring you back in and put you back into your, into your home as well.
Then you would provide at least one follow-up visit?
That would be my expectation.
Thank you.
Eleanor, I don't know if you have a different view on that, but yeah. That would typically be our expectation. As I said, there would be a limited degree of support without sort of discussing with you around, you know, what services and support you needed. Yeah.
All right. Further questions?
Hi, I'm Andrew McKenzie. I'm just wondering, a couple of your competitors recently talked about potentially reducing the percentage of care beds going forward, given the underfunding by the government. Is that something? You mentioned another 3-5-year strategic review going on at the moment. Are they the sorts of things that you sort of talk about during this?
Fundamentally, what we are very focused on is that we will deliver care services and care facilities to our residents first and foremost. The issue becomes to the extent that we've previously offered, care facilities to those outside, not being, to non-residents. That is an area of focus for us because our margins are pretty, very thin on care, and therefore our focus is very much turned to, well, what size of facility do we need to look after our residents? That's fundamentally where our strategy is driven.
Okay. Thank you. Just one other question. There seems to be a lot of bad publicity going on at the moment about retirement villages and contractual arrangements and things. I understand there's a sort of a paper being put together for a retirement commission or something like that two months before the election. Are these things that you sort of work through your scenarios or how to deal with those sorts of situations?
Yes, we do. We don't expect any fundamental changes to occur, it's fair to say in terms of the reviews, because if you start playing with the way the model is constructed at the moment, the fact is that if you look over the long term, the returns that our shareholders make from us operating the business are reasonable. They are certainly not excessive. If they were to change the model, then, you know, it's the difference is going to have to be made up somewhere else.
Industry.
fundamentally, it doesn't make sense to change the model. There are aspects of certainly some of our competitors', behaviors, arguably, that you could look at and say, you know, maybe there are areas that the review should focus on. We're pretty well satisfied that the way that we run things at Summerset are very fair and appropriate and are fully transparent.
Okay.
Okay. I might move to some online questions. This one is: It is noted that the Parnell development has been put on hold. Is there any update on this? Scott, you briefly mentioned it in your address. It remains under review. We've taken the opportunity, given the situation with construction inflation and the like, to look at the feasibility of that project. We haven't, certainly haven't, given up on it, we've just put it on pause for the moment. It makes sense to us to do that. There really isn't a further update beyond that.
No, I think, sorry. I'll just say, the principal thing we're doing there really is assessing what the market conditions would need to change by. E.g., sort of things like construction costs would need to change by to make it feasible for us to sort of build that site. That's something that we're still looking at over the next six months.
Another question, again, related to Parnell. If the Parnell development does not go ahead, would it be possible to replace the hundred-year-old oak trees that were taken down? This would be an appropriate gesture to the local neighborhood. Scott, would you like to take that?
I think that's something we definitely could consider, but it would be pro-post strategic review.
Next question asked by Bruce Parks. Clinical care and occupational health and safety are in the upper right-hand side of the residual risk profile. I note our membership of the Cross-sector Clinical Benchmarking Group and a strategy aiming for best practice. Consistent delivery of best practice can be difficult. Can the chair of the Clinical Governance Committee tell us what is being done to ensure that best practice developments are being delivered across all Summerset villages? Well, that's very clearly, Marie, being directed to you, so I'll get you to answer, please.
That's a great question. It's been remarkable to see the change in the time that I've been on the Summerset board. When I first started, we had around 20 villages, and they largely operated as independent villages. Sitting on the board, you couldn't always be confident about the quality of care that was being provided. Over time, we've got much more consistent policies and practices. We train our staff to similar standards across the country. The use of some of our electronic systems, like VCare, certainly help with ensuring a certain level of care across the country. We get lots of reporting at board level about various metrics that we keep an eye on. Initially, that enabled us to see whether best practice was being implemented at individual villages.
We were really interested in how we compared with the rest of the sector. As I mentioned earlier, we now support a national benchmarking group. I think in some ways, aged care providers can sometimes have some competitive tension with each other, but when it comes to the quality of care, it's a very collaborative sector that we're all interested in improving the quality of care across the whole sector. We can also use that benchmarking data to make sure that we're not just doing well within Summerset, but compared with other providers nationally as well. We keep a really close eye on international developments as well. Some of my clinical practice is in Australia, and I'm very connected with international quality improvement networks to try and make sure that we're staying ahead of those developments. Thanks for the question.
Thanks, Marie. Again, Bruce Parks. The development margin has returned to pre-COVID levels in an environment of rising construction costs and falling house prices. Is the margin sustainable? Well, again, I think this was addressed directly by Scott in his address. We would expect that development margin to sort of, to revert to mean, as if I could put it that way, somewhere between 20%-25%, partly due to construction price inflation. We also do have a number of our procurement, supply procurement contracts that will be up for renewal. We would expect to see the development margin settle back in that area. Scott, is there anything you want to add to that? Okay. Right. Are there any more questions? Is that pretty much it? This is from Deborah Mary Williams.
I personally think that it is double-dipping not, to not only take up to 25% of the original payment for any village, but to also take the gain from the usually higher selling price when a person no longer lives in a room or unit. In light of Janet Wilson's comments in the media questioning the fairness of agreements, how do you think Summerset's conditions rank with other unnamed villages? I would say, as a broad statement, I think, we rank pretty well. The first thing is that we're very transparent with incoming residents as to what they're signing up for. If you, it's complicated, but if you do understand the underlying economics of this business across the long term, you know, the cash returns from it are not as high as you might expect.
They're not what I would call excessive. I genuinely don't think there's a problem there. As I said earlier, if we start playing with the model in one sense of changing the deferred management fee level, you will find there has to be. In order to have a sustainable business and to look after people to the quality and standard you would expect, there's gonna have to be another payment made elsewhere. It's just the reality of the situation. I certainly hold by the view that, and my parents went through this situation themselves. I do not regard the returns that are being made by shareholders as being excessive here. Anything to add?
Yeah, look, I'll just add a couple things. One was, the 25%. Obviously, that covers two separate aspects. One is it covers refurbishment of a villa when a resident leaves, and then the second one is it covers the sort of more infrastructure maintenance we have across our villages. So you can imagine villages 20 years old needing to do main building refurbishments, care center refurbishments. They add up into the dollar value pretty quickly. In terms of transparency, which Mark talked about in relation to the contracts, we've done quite a lot of work over recent years of trying to make sure those contracts are really easy to read, plain English, easy to understand. We obviously also ask for people to sign those contracts in the presence of a lawyer so that's explained to them.
Also, you know, more often than not, we try and make sure that residents' families do come and visit and see what Summerset's about before they actually enter into a contract as well. You know, I think there's some good protection mechanisms there as well.
A question again from Deborah Mary Williams. Does Summerset pay all staff at least a living wage? If not, why not? Well, what we've previously committed to is that we will pay our staff above the minimum wage. We don't plan to adopt the living wage. What we do also in relation to all of our staff is we provide them extra benefits. They get medical cover, they get funeral cover, they also get to participate in a broad share scheme that is there for the benefit of our staff. We look very closely at rewarding our staff above generally what they could be paid elsewhere in the sector. Question from the Margaret L. Bailey Family Trust.
What provision is being made in all of your villages, current and proposed, for the use by residents of EVs, electric vehicles? Well, the first thing I would say is that we've started introducing chargers to our villages, and gradually over time, you will see those rolled out. In relation to the use of EVs themselves, Scott, do you want to comment?
Yeah. EVs, all village vehicles that we're buying now are electric vehicles. We have done a trial in one of our South Island villages, which we sorted a pilot to basically allow residents to use those electric vehicles. That seemed to go very, very well. It's been a recent pilot we've just done. I think it went that well that the village decided to continue on with the trial permanently. Look, we'll probably take that under just a review in sort of the next month or two to just assess if we're gonna roll that out further. It looked pretty positive in terms of resident usage of them.
Yeah, I think you will see over time, A, electric vehicles going into all villages, but B, the likelihood that we will roll them out for resident use.
Again, Bruce Parks. For FY 2022, there was a 39% increase in receivables with over a 100% increase in provision for impairment over FY 2021. What has caused that? Is it reversible or are we on a slippery slope to further impairments? Well, the first comment I would say, Bruce, is that as a percentage of our gross trade receivables, this percentage is still extremely low. It's gone up, well, 1%, basically, a little over, not huge. As to why that would have happened, quite possibly, due to COVID, people's ability to pay bills potentially being the main factor. It's probably also fair to say, Scott and Will, that FY 2021 was possibly an aberration.
A more normal rate if we go back further than that would be around the level that it is sitting now. The nub, Bruce Parks, we would say, there's nothing to be concerned about. Any more questions? No. Any more questions from the floor? Just check. Right. Okay. Ladies and gentlemen, I'll thank you for your attendance. I will now declare the meeting closed. As I said, the polling results will be available on the two stock exchanges on which we are listed. Thank you. For those present in the room, please join us for some refreshments. Thank you very much.