Ryman Healthcare Limited

Thank you for standing by and welcome to the Ryman Healthcare full-year results briefing. All participants are in a listen-only mode. There will be a presentation followed by a question at the end of the session. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I'll now like to hand the conference over to Naomi James, Chief Executive Officer. Please go ahead.

Welcome everyone and thank you for joining us for our FY26 full-year results. With me today, I have Matt Pryor, our CFO, and Hayden Strickett, our Head of Investor Relations. Today, we will run through the significant progress we've made and how this is translating into improved performance. Reflecting our strategy refresh, we will talk to retirement living and then to aged care, showing the differences of these earnings streams. And we'll leave time at the end for your questions. Let's start with the highlights on slide four. FY26 marks an important operational inflection point for Ryman, with the work undertaken over the last two years now translating into improved performance, cash flow generation and balance sheet strength. Earnings momentum is building. With growth in recurring earnings and significant costs removed, we've doubled our operating EBITDAF. And for the first time in more than a decade, we delivered positive free cash flow of $188 million. This has been delivered in mixed market conditions, demonstrating the resilience and sustainability of the actions taken. We now have a strong and flexible balance sheet with the completion of our bank refinancing during the year. This, alongside our new capital management framework and $147 million in contracted land investments, provides Ryman with much greater resilience and flexibility through the cycle. Moving to slide five. Before I step into our FY26 financial results, I want to touch on our portfolio as it stands at the end of the year. We now have only two sites actively under construction, lowering our exposure to inflation and construction costs and property cycles. Following the closure of two of our oldest villages and transfer of those residents to newer ones, we have a higher quality portfolio. Our portfolio has an average village age of less than 12 years, and an average age of entry for independent residents of over 80 years, reflecting our care-centric offering. While our asset and resident base has been growing, our team member numbers remain unchanged, and as we maintain the quality of care and resident experience we know is paramount to our future success, with a lower overhead structure. And as we work to improve our financial performance, as you can see on slide six, we are equally focused on our residents and our team. Improving our customer NPS scores year on year, continuing to win a number of industry awards, and keeping our team, who enable all of this, engaged through a period of change. Slide seven gives you a performance snapshot of the year that's been. On the left, our financial performance, growing recurring earnings and cash flow, and materially reducing capital spend. Retirement living is in the middle, where we have delivered FY26 sales in line with guidance, and a building sales performance at a higher and more sustainable level of DMF. And on the right, aged care, with strong occupancy, earnings growth, and capital inflows. Now starting with retirement living on slide nine. As a reminder, we reset our contract terms back in October 2024. And as you can see, these changes are now embedded in the market. With the deferred management fee for new residents averaging 30% and weekly fees for new residents up 63% on unit turnover. While these changes do take time to flow through the portfolio, We've done the hard yards in the market, and it's a step change that will drive a significant uplift in long-term value and sustainability. Turning to slide 10, you can see we now have 17% of our retirement living portfolio on the new weekly fees, which is predicted to grow to around half the portfolio by FY29. And with reset pricing, we are seeing growth in both serviced and independent fees per occupied unit. This will progressively flow through the portfolio over time, driving strong growth in future recurring revenue. On to slide 11. As you know, our sales team have been implementing a number of initiatives to improve our sales effectiveness after having made the necessary changes in DMF and weekly fees. We've had a focus on lead quality, improving the number of contracts that converted, and the number of contracts that have settled within 90 days. We have seen this flow through to improvements in net resales across all regions, despite mixed market conditions. And in the last quarter of FY26, we saw applications exceed turnover for the first time since October 2024. This is the key lead indicator we watch as we work to reduce resale stock and payouts. Turning to slide 12, Importantly, targeted sales and marketing has meant that these resales are coming from new residents at higher weekly fees and deferred management fees rather than internal transfers. It's the combination of these resales and new sales to new residents that will accelerate the shift in our portfolio from old to new contract terms in the coming years. Moving to pricing on slide 13. We continue to see a highly competitive environment in some regions, with a broad range of incentives at play in the market. As part of our strategy to rebuild sales and lower the levels of stock, we are using targeted pricing. With adjustments targeted at a village and individual unit level, this has led to only a modest fall in average pricing. Resale margins have continued to moderate as expected, reflecting the lower house price inflation environment of recent years. Importantly, as you can see from the cash generation chart, our pricing is converting to cash. This gives good transparency that our headline new sales metrics and our resales pricing are aligned. And we are maintaining the quality of our contract book with a stable age of entry, as I mentioned up front. and unchanged resident tenure after having moved to a more realistic rate of DMS revenue recognition back in FY25. Looking at slide 14 and our resales, you can see that the growth we had been seeing in paid out stock is moderated with improving sales effectiveness and our pricing model changes now embedded. Our focus heading into FY27 remains on increasing sales volumes to match turnover, growing occupancy on our new contract terms and releasing capital from paid out stock. While our resale stock did increase last year, pleasingly the portion that is contracted has also lifted, giving us confidence in sales catching up to turnover and reducing the vacant stock we have. As I'll talk to shortly, We also see opportunity to grow the uptake of existing and new care capital products from residents transferring from retirement living to care. This presents a meaningful opportunity with approximately half of retirement living residents moving to care at some point. Moving to slide 15. We have seen independent new sales volumes greater than new stock delivery over the last four halves now. In FY26, you can see independent living apartment stock down 55 units and service apartment stock down 39 units. With unoccupied new sales stock value at 31 March of approximately $400 million, there remains a meaningful cash release opportunity ahead for Ryman. Now let's look at aged care on slide 17. We have opened five new care centres in the last two years. and over the next three years will open one each year. Growing occupancy at these new care centres will be a key revenue driver for Ryman. Driven by care demand and our sales initiatives, we've seen significant uplift in occupancy in all our new care centres across FY26, ahead of our expectations. Demonstrating this strength in care demand, you can see Keith Park in Auckland opened in August 2024, Burt Newton in Melbourne opened in November 2024, and Kevin Hickman in Christchurch opened in July 2025, have all now reached 90% occupancy. On to slide 18. We are seeing New Zealand premiums up underpinned by the sustained demand for our care offering. Consistent with premium trends in New Zealand, We have also seen strong growth in RADs in Australia, reflecting sustained demand for our high-quality accommodation offering and mature care centres. We know that paying for care is a significant cost for residents and families, and so we have introduced a new product we call the Resident Fund, which is exclusive to Ryman residents. It makes the transfer from retirement living to care seamless. with residents taking their capital with them. This differentiates us in the market compared with care being offered under a DMS contract, which is not always a match with the needs of residents and their families when transferring to care. And we have already seen 17 million of capital retained since the launch of the product in the second half of FY26, with plans to further grow this in FY27. The growing level of premium penetration across our care beds over 80% in both Australia and New Zealand, together with high occupancy in mature villages and growing occupancy in developing villages, demonstrates we are getting our pricing and product offering right in the market. Moving to slide 19, you can see the benefit of the higher premiums and rate inflows into our revenue and cash flow. Revenue per bed is up 6% in New Zealand and 9% in Australia. And with only one new care centre opening in FY26 compared to four in FY25, cash flow from care capital was steady at $81 million, a key contributor to our strong free cash flow result. Importantly, these earnings are driven by occupancy, care demand and resident acuity rather than housing market conditions. The flexibility of our portfolio is one of Ryman's strengths. As our population's age and government policy changes increase care in the home and the acuity of residential care, the scale and flexibility of our care portfolio becomes increasingly important. During FY26, we saw this reflected in growing demand for swing beds and hospital level care, providing rest home care into a small but building number of service departments. Slide 20 gives an update on the highly active policy environment as the New Zealand and Australian governments work to address the growing shortage of aged care beds. Australian reforms are in place and in the coming year we will start to see the benefits of the 2% per annum retention on RADs signed after 1 November 2025. On a new incoming RAD, which in FY26 averaged $747,000 Australian, This equates to around 15,000 per bed per annum. In New Zealand, the government ministerial advisory group recommendations are expected in the coming weeks, with a government response anticipated ahead of the New Zealand election. We expect some similarities with reforms introduced in Australia, which have supported more efficient utilisation of aged care and hospital capacity. Slide 21 updates on our progress towards the 25 to 30,000 operating EBITDAF per bed target we set ourselves at the investor day in February. For the second half of FY26, we were at 20.2,000 per bed. This has been helped by the Australian Aged Care Funding reforms. We expect aged care profitability to continue improving as occupancy grows across developing villages, premiums and RADs increase and operational efficiencies continue to build. And in New Zealand, as the necessary funding reforms progress. As our care earnings grow as a proportion of the group, we will continue to build a more diversified, resilient and recurring earnings profile. Now let's talk to development, starting with slide 23. With a more disciplined approach to development, we have now reduced the active sites under development to two. This materially reduces the capital intensity and risk profile of the business compared with prior years. The Richard Hadley main buildings will open in the second half of FY27 and Patrick Hogan in FY28. In addition, the redesign of Hubert-Opeman is progressing well and we have recently submitted our planning permit application. The remaining stages are expected to improve the timing and recycling of capital, with construction expected to start later in FY27. These three main buildings represent the final ones to complete our developing villages, and together with the next two stages of townhouses at Patrick Hogan, represent the total capital work we view as committed at this point, with an estimated total cost to go of $190 million. With this limited development activity underway and half of our FY27 development capex already locked in under fixed price contracts, our exposure to cost escalation and housing market conditions is significantly reduced. On slide 24, you can see the significant growth in occupied units across all 10 villages with new stock delivered in the past two years. And it's been great to see such broad-based new sales including in Auckland, with all of our developing villages contributing. On slide 25, you can see we have now contracted 147 million in land sales of sites that did not meet our revised development criteria. From these sales, we have so far received a total of 72 million in cash proceeds. Following further feasibility review of the Coburg North site, We have now included this in our land bank to be sold and have increased our target for land investments to around $250 million. Moving to future development on slide 26, which remains a key enabler of future growth. We have retained five greenfield sites in markets with enduring demand and in FY27, we'll be prioritising the best opportunities for future development across the portfolio. We are both mindful of the impacts of recent oversupply in the market and are anticipating there will be benefits that flow from the current market conditions with a likely moderation in development activity at the same time that demand is continuing to grow and more disciplined capital allocation across the sector. I'll now hand over to Matt to run through the financials and capital management.

Thanks Naomi. Our key financial metrics on slide 28 showcase a year defined by renewed momentum across the business. In an environment that continues to evolve, we have delivered strong operational performance, strengthened our balance sheet and positioned the business for sustainable long-term growth. Today, I'm pleased to take you through the financial results and the drivers behind our performance. Slide 29 shows our operating profit and loss. which highlights the year's revenue growth outpacing expenses. And with that discipline, a doubling of operating EBITDAF, a clear sign that our strategy is working. Operating revenue increased 10% supported by fee growth across aged care and retirement living, as well as a 2.6% increase in the number of residents. DMF improvement was modest this year, as expected, due to the change in accrual recognition periods in FY25. But as we transition to the front book of 30% DMF contracts and the legacy 20% contracts roll off, DMF revenue will accelerate and support growth in our years. Ultimately, it is the improvement in profit measures per share that underscores a year of progress. And in shifting away from non-cash underlying profit, we are better able to connect our results to cash flow. Slide 30 breaks out our operating earnings. and shows the list in margins from strong performance in our New Zealand and Australian villages. Our transition to a clearer operating model combined with new contracts and fees, a sharper focus on care performance and a disciplined management of non-village costs is now showing in the numbers. In New Zealand, EBITDAF margins expanded 250 basis points with steady half-on-half improvement as we tightly managed cost growth. In Australia, revenue accelerated, and in the second half was up 21% from occupancy in developing villages, stronger care in village fees, and rising RAD imputed interest. Moving to slide 31, where I want to thank our teams for the work to deliver $57 million in gross annualized cost savings since FY24, which is at the top end of our guidance range of $50 to $60 million that was upgraded at the first half result. Total savings have come from reshaping our non-village functions, driving operating efficiencies across villages and embedding stronger procurement practices. Operationally, in developing villages, we are seeing higher occupancy now flowing through to meaningful revenue growth. And in our mature villages, we are achieving margin expansion through a deliberate combination of pricing initiatives and continued cost focus. These outcomes demonstrate our operating model is building momentum across the portfolio. Slide 32 is a highlight of the result. We've aged care the standout contributor to our improved performance over the year. As this segment reporting is new since our first half result, this is a half-on-half comparison. And an important call-out on this slide is to note that there are 75 million of support costs allocated across the two segments. as detailed in the appendix. In the second half, revenue and care grew 7% against a 3% rise in expenses with this operating leverage equating to 32% growth in EBITDAF. EBITDAF per bed lifted 31% to just over 20,000 from higher occupancy, strong premium pricing and better operational efficiency. Following investor feedback, we are also providing our EBITDAF per bed in each country which for FY26 reached 15,000 in New Zealand and just over 32,000 in Australia in New Zealand dollar terms. In retirement living, revenue growth remained modest as the transition to the front book continues. And while refurbishment cost reclassification affected reported EBITDAF, excluding this change, performance improved over the year. Turning to our non-village performance on slide 33. The charts on this slide tell the story of how we've continued to reshape our cost base, with the results now becoming clearer in our numbers. Over the past two years, the company has moved from a regional structure to a functional operating model, and that shift, combined with cost discipline, is driving a leaner, more efficient organisation. Gross non-village costs are down 25% and headcount has reduced 39% since FY24. reflecting the structural progress we've made. A lower overhead platform gives us the flexibility to scale in line with market conditions. And to continue to drive our sales uplift, we will make near-term investments in selling and marketing capability. In the longer term, we won't stand still. With improvements in systems, digital capability and AI-driven productivity, supporting a target of normalised non-village costs, below $100 million by FY29, a measurable commitment to sustaining efficiency and strengthening our margins. Slide 34 is cash flow from existing operations, with a core part of our strategy focused on growing recurring cash flow in the business. From what we have presented in the doubling of earnings, you can also see this in our cash flow from village operations. which has particular relevance to the progress against our target of $150 million improvement in sustainable CFEO by FY29. Within CFEO, net resale cash flow was softer, reflecting a $53 million increase in bought back stock, as well as a lower resale margin. Importantly, net resale receipts exclude $22 million of repaid auras from closed villages, which have been reclassified to CFDA, which is also where the proceeds from these land sales will be recorded. FY26 also includes $18 million of net one-off cash costs relating to transformation, legacy payroll remediation and other non-village items, some of which had been accrued in previous years. Slide 35 shows cash flow from development activity as well as free cash flow. Robust new sales, moderating development spend and our land bank divestment program drove a strong cash flow outcome for the year, with CFDA increasing by over $200 million. Development capex reduced materially as our build program moderated, with active construction sites decreasing from seven to two. We also saw a reduction in capitalized non-village expenses and interest, reflecting less work in progress and reduced cost capitalization. As development reduced and we completed a number of projects with contingency released, our FY26 CapExpend of $222 million was slightly below our guidance of $235 million. Altogether, free cash flow across both CFEO and CFDA increased by more than $280 million year on year, demonstrating the strength of our operating model and the benefits of disciplined capital allocation. Turning now to capital management. On slide 37, you can see our investment property values have increased 2%, supported by FX movements and new additions, but partly offset by fair value adjustments. I would note that there has been a material decline in the New Zealand dollar to the Australian dollar over the period, impacting asset values as well as net debt, which is shown on the following slides. Across the year, we delivered 250 new units alongside continued investment in main buildings at villages such as Kevin Hickman, Richard Hadley and Patrick Hogan, all of which positions us for future value growth. The movement in fair value on both new and existing units reflects market conditions and our targeted price adjustments during the year. Slide 38. shows the valuation uplift we are seeing in aged care, which is aligned with the improved financial conditions across the sector. Book values per bed increased year on year, with New Zealand up 11% and Australia up 16%, or 6%, on a constant currency basis. Whilst valuation practices vary across the sector, Ryman's approach is aligned with accounting standards, and our care centre book values reflect land and buildings only. Despite this uplift, Australian bed values remain around three times higher than those in New Zealand, which are well below the cost to build, highlighting the current differences in funding and the operating settings between the two countries. But New Zealand is well positioned for improvement as funding reform progresses. Slide 39 highlights that during the period we've strengthened the balance sheet. We've net debt down $94 million, to $1.57 billion at the end of the financial year. I'd note that the reduction in net debt is lower than our reported $188 million cash flow, largely due to currency translation, which resulted in approximately $90 million of headwind due to the strength of the Australian dollar. However, our Australian dollar assets also increased in New Zealand dollar terms, meaning that the impact from currency on our net assets is broadly neutral. Our property portfolio now sits at $12 billion and overall our net tangible asset value is broadly unchanged from FY25 and stands at just over $4 billion or $4 per share. I should acknowledge that our share price is presently trading at a meaningful discount to NTA but also note that the recent asset sales have been realised in line with their book value. Ryman's board is very conscious of shareholder value. and it recognises the high threshold for allocating free cash flow in consideration of capital management options. Turning to slide 40, which revisits the full refinancing of our $2 billion in bank facilities announced at the time of our first half result, which provided improved pricing and no bank maturities until FY31. With $675 million of debt headroom and an industry-low gearing level under 28%, we have a substantial liquidity buffer that supports disciplined growth. To maintain the diversification of our funding sources, we are also assessing options for our retail bond maturing in December. Overall, our balance sheet is resilient, flexible, and positioned to support the next phase of growth. My final slide, slide 41, highlights the substantial reduction in our annualised gross interest costs. down $68 million since February 2025 from the combined benefit of the equity raise, improved cost of debt and positive free cash flow. Post refinancing, our average cost of debt is now 5.9%, around 30 basis points lower than in March 2025. And with two thirds of our interest exposure fixed over the next two years, we have locked in stability at a time when certainty matters. Given this, we are well positioned to navigate the current rate cycle while continuing to strengthen the balance sheet. I'll now hand back to Naomi to talk to our strategic priorities and outlook.