1 00:00:00,280 --> 00:00:02,520 Speaker 1: The information provided in this program is of a general 2 00:00:02,600 --> 00:00:05,320 Speaker 1: nature and is not intended to be personalized financial advice. 3 00:00:05,400 --> 00:00:07,760 Speaker 1: We encourage you to seek appropriate advice from a qualified 4 00:00:07,760 --> 00:00:12,200 Speaker 1: professional to suit your individual circumstances. Royman Healthcare makes hundreds 5 00:00:12,200 --> 00:00:15,320 Speaker 1: of millions of dollars in revenue every single year, and 6 00:00:15,360 --> 00:00:18,079 Speaker 1: it's doing some kind of a public service by housing 7 00:00:18,120 --> 00:00:21,680 Speaker 1: retirees and villagers like this one, albeit at a pretty 8 00:00:21,760 --> 00:00:24,560 Speaker 1: high cost. But it's one of the worst performing stocks 9 00:00:24,600 --> 00:00:26,360 Speaker 1: on the INSIDEX so far this year. 10 00:00:26,800 --> 00:00:30,320 Speaker 2: So how did something seemingly so good go so wrong? 11 00:00:30,640 --> 00:00:33,120 Speaker 3: So I think it's been a financial lens where it's 12 00:00:33,159 --> 00:00:35,640 Speaker 3: been a disaster. That's a work in progress medicine. We 13 00:00:35,680 --> 00:00:39,199 Speaker 3: need to steer at that. We've grown overhead faster than 14 00:00:39,240 --> 00:00:43,720 Speaker 3: we've grown resident numbers. So a simple person lot myself 15 00:00:43,760 --> 00:00:45,840 Speaker 3: doing that metric that doesn't feel right. 16 00:00:56,320 --> 00:01:00,480 Speaker 1: For the first time Ryman Healthcare's chairman, Dean Hamilton taking 17 00:01:00,520 --> 00:01:04,280 Speaker 1: the time to talk publicly while all smiles playing lawn 18 00:01:04,280 --> 00:01:06,760 Speaker 1: bowls at a Riemann village in Auckland, he and his 19 00:01:06,840 --> 00:01:10,280 Speaker 1: company had a lot to answer for. He's recently stepped 20 00:01:10,280 --> 00:01:14,160 Speaker 1: into an executive chair role, filling the CEO vacancy left 21 00:01:14,200 --> 00:01:18,920 Speaker 1: by Richard Umbers, who resigned effective immediately in March. The 22 00:01:19,000 --> 00:01:22,800 Speaker 1: retirement village operator was once a market darling. Now it's 23 00:01:22,840 --> 00:01:25,680 Speaker 1: one of the worst performing stocks of the year, down 24 00:01:25,880 --> 00:01:29,639 Speaker 1: thirty seven percent or seventy six percent from its peak. 25 00:01:30,280 --> 00:01:33,520 Speaker 1: The company just reported a ninety eight percent decline in 26 00:01:33,680 --> 00:01:37,759 Speaker 1: annual net profit after changing the way its properties are valued. 27 00:01:38,520 --> 00:01:40,959 Speaker 1: It still has two and a half a billion dollars 28 00:01:40,959 --> 00:01:45,120 Speaker 1: of debt, despite just raising around nine hundred million to 29 00:01:45,200 --> 00:01:47,880 Speaker 1: pay down expensive US debt obligations. 30 00:01:48,640 --> 00:01:50,320 Speaker 2: Rayman's had a long history. 31 00:01:50,760 --> 00:01:53,800 Speaker 1: It opened its first village in New Zealand forty years ago. 32 00:01:54,240 --> 00:01:57,440 Speaker 1: It's been listed on our Exchange for twenty five years. 33 00:01:58,000 --> 00:02:01,400 Speaker 1: It now owns and operates forty eight retirement villages in 34 00:02:01,440 --> 00:02:05,040 Speaker 1: New Zealand and Australia that are home to about fourteen 35 00:02:05,160 --> 00:02:06,360 Speaker 1: thousand residents. 36 00:02:07,040 --> 00:02:08,160 Speaker 2: Rayman and the rest of the. 37 00:02:08,120 --> 00:02:11,600 Speaker 1: Retirement village sector make money by selling the right to 38 00:02:11,720 --> 00:02:15,760 Speaker 1: occupy units and its villagers to retyrees after they sell 39 00:02:15,840 --> 00:02:20,280 Speaker 1: up their homes. On paper, those residents are occupants, not 40 00:02:20,520 --> 00:02:21,880 Speaker 1: property owners. 41 00:02:22,040 --> 00:02:24,760 Speaker 2: So when they sell the operator. 42 00:02:24,600 --> 00:02:28,560 Speaker 1: Like Ryman, keeps all of the capital gain and charges 43 00:02:28,639 --> 00:02:33,160 Speaker 1: occupants and management fee Ryman's is twenty percent lower than 44 00:02:33,240 --> 00:02:37,440 Speaker 1: competitive summer sets twenty five percent and others with thirty percent, 45 00:02:38,040 --> 00:02:39,079 Speaker 1: but that fee. 46 00:02:38,800 --> 00:02:39,920 Speaker 2: Is now under review. 47 00:02:40,400 --> 00:02:43,720 Speaker 1: One of many changes Dean and his refreshed border implementing 48 00:02:44,160 --> 00:02:47,959 Speaker 1: to try and restore invest of faith in Ryman's ruins. 49 00:02:48,400 --> 00:02:49,760 Speaker 2: Dean, thank you so much for doing this. I do 50 00:02:49,800 --> 00:02:50,600 Speaker 2: really appreciate it. 51 00:02:50,720 --> 00:02:51,359 Speaker 4: Great to be here. 52 00:02:51,639 --> 00:02:53,880 Speaker 1: I'm going to let you kick this off right set 53 00:02:53,880 --> 00:02:55,799 Speaker 1: the tone. What do you want to say to investors 54 00:02:55,800 --> 00:02:56,240 Speaker 1: watching this? 55 00:02:56,560 --> 00:02:58,440 Speaker 4: Sure? I think it's been a big period of change 56 00:02:58,440 --> 00:02:59,120 Speaker 4: for Ryman. 57 00:02:59,160 --> 00:03:01,600 Speaker 3: When I came on board nearly a year ago now, 58 00:03:02,000 --> 00:03:04,000 Speaker 3: it was definitely with the change agenda. You know, there 59 00:03:04,000 --> 00:03:06,680 Speaker 3: have been strong messaging back from Shields before we started 60 00:03:07,120 --> 00:03:09,880 Speaker 3: around a desire for change in the board, a desire 61 00:03:09,960 --> 00:03:12,320 Speaker 3: for change in management, a desire for the change in 62 00:03:12,360 --> 00:03:17,280 Speaker 3: which we account, a desire for what we portray to investors. 63 00:03:17,440 --> 00:03:19,919 Speaker 4: So there was definitely a big appetite for change. 64 00:03:19,960 --> 00:03:23,440 Speaker 3: The business's performance had deteriorated over time, the share price 65 00:03:23,520 --> 00:03:26,880 Speaker 3: had come down significantly, so it was kind of obvious 66 00:03:26,919 --> 00:03:27,359 Speaker 3: to all that. 67 00:03:27,480 --> 00:03:28,720 Speaker 4: Was a change agenda. 68 00:03:28,919 --> 00:03:31,600 Speaker 3: So really in the first twelve months has been doing 69 00:03:31,600 --> 00:03:33,919 Speaker 3: a lot of those things you know significant change. Half 70 00:03:33,919 --> 00:03:37,680 Speaker 3: the boards changed, half the senior leaderships changed and were 71 00:03:37,680 --> 00:03:41,440 Speaker 3: released on Monday, a new last Monday, a new set 72 00:03:41,440 --> 00:03:44,240 Speaker 3: of results and a new way of communicating with investors, 73 00:03:44,280 --> 00:03:47,000 Speaker 3: which appears to have gone down relatively well. 74 00:03:47,080 --> 00:03:50,720 Speaker 1: Analysts have used words like disastrous and that's just what 75 00:03:50,760 --> 00:03:53,560 Speaker 1: they're putting in writing, not what they're actually saying. 76 00:03:53,720 --> 00:03:56,320 Speaker 2: Sure, how would you describe this, Tam, Yeah, I think. 77 00:03:56,200 --> 00:03:59,320 Speaker 3: The financial performance has slowly deteriorated, a bit like I 78 00:03:59,400 --> 00:04:01,440 Speaker 3: think being in a pot, and then when you look 79 00:04:01,440 --> 00:04:02,960 Speaker 3: at it five years later, you go, how did the 80 00:04:02,960 --> 00:04:06,400 Speaker 3: business get to this position? And I think it's been 81 00:04:06,440 --> 00:04:10,680 Speaker 3: a slow move across multiple fronts. They had an enormous 82 00:04:10,720 --> 00:04:13,680 Speaker 3: development pipeline on if you go back four to five 83 00:04:13,800 --> 00:04:18,960 Speaker 3: years fourteen live developments across Auckland primarily and Victoria, and 84 00:04:19,279 --> 00:04:21,960 Speaker 3: I think when the music stopped and COVID and construction 85 00:04:22,000 --> 00:04:24,280 Speaker 3: inflation took off, they were really caught with too much 86 00:04:24,320 --> 00:04:24,880 Speaker 3: on their plate. 87 00:04:25,080 --> 00:04:27,839 Speaker 4: I think quite simply that led to delays. 88 00:04:28,160 --> 00:04:30,520 Speaker 3: Interest rates went up, so the cost of building those 89 00:04:30,520 --> 00:04:33,600 Speaker 3: things went up, construction inflation went up, So of all 90 00:04:33,680 --> 00:04:36,560 Speaker 3: the operators, Rayman had the most on their plate at 91 00:04:36,560 --> 00:04:39,240 Speaker 3: that point in time. So I think that's taken four 92 00:04:39,279 --> 00:04:41,320 Speaker 3: to five years to eat through and we're still not 93 00:04:41,400 --> 00:04:44,040 Speaker 3: through that yet. On the other side, when you come 94 00:04:44,040 --> 00:04:46,440 Speaker 3: into a village, an existing village, kind of two things 95 00:04:46,440 --> 00:04:49,200 Speaker 3: have happened gradually there. One on the Kre side, so 96 00:04:49,240 --> 00:04:51,600 Speaker 3: we do both retirement living in Kia virtually. 97 00:04:51,360 --> 00:04:52,080 Speaker 4: All of our villages. 98 00:04:52,120 --> 00:04:54,640 Speaker 3: We call it a continuum of care, so that people 99 00:04:54,640 --> 00:04:57,200 Speaker 3: can move across and stay with the within the village 100 00:04:57,800 --> 00:05:00,120 Speaker 3: as their health changes or they need to change. And 101 00:05:00,160 --> 00:05:03,160 Speaker 3: on the care side that has really has the profitability 102 00:05:03,160 --> 00:05:06,159 Speaker 3: that is weaken over the last five years. Whilst governments 103 00:05:06,160 --> 00:05:09,120 Speaker 3: have slowly increased the rate because that's largely government funded, 104 00:05:09,200 --> 00:05:11,920 Speaker 3: and whilst that the rates have gone up gradually, that's 105 00:05:11,920 --> 00:05:16,080 Speaker 3: in no way kept pace with nurse and keygiver wages 106 00:05:16,120 --> 00:05:19,120 Speaker 3: and salaries. So our margins, the whole age care industry's 107 00:05:19,160 --> 00:05:22,280 Speaker 3: margins have collapsed in that time. And you'll see the 108 00:05:22,320 --> 00:05:25,719 Speaker 3: last Labor government have started a review that's been carried 109 00:05:25,760 --> 00:05:28,240 Speaker 3: on by the new government and two Fridays ago this 110 00:05:28,320 --> 00:05:31,440 Speaker 3: government said they're going to review age care funding. So 111 00:05:31,520 --> 00:05:35,280 Speaker 3: I think they realize that piece is broken. Beds are closing, 112 00:05:35,400 --> 00:05:37,159 Speaker 3: not obviously in the large operators, but in the small 113 00:05:37,200 --> 00:05:40,120 Speaker 3: single operators, the closing people aren't building much more care. 114 00:05:40,520 --> 00:05:42,400 Speaker 3: At the same time, you've got a wave of older 115 00:05:42,400 --> 00:05:45,919 Speaker 3: people demographically happening that's kind of undeniable. 116 00:05:46,560 --> 00:05:47,800 Speaker 4: So I think the government's. 117 00:05:47,440 --> 00:05:50,000 Speaker 3: Realizing if they don't solve the age here piece, it'll 118 00:05:50,040 --> 00:05:53,280 Speaker 3: become a hospital piece, and that's not what they want 119 00:05:53,320 --> 00:05:55,640 Speaker 3: because if they can't turn up here, they'll turn up 120 00:05:55,800 --> 00:05:58,200 Speaker 3: there at four times the cost of tuning up to here. 121 00:05:58,440 --> 00:05:59,960 Speaker 4: So I think that's dawning on them. 122 00:06:00,120 --> 00:06:02,680 Speaker 3: But we've suffered through that as the whole age care 123 00:06:02,680 --> 00:06:05,200 Speaker 3: industry has. The other piece of what when you see 124 00:06:05,200 --> 00:06:07,080 Speaker 3: a village as a retirement part of the village where 125 00:06:07,120 --> 00:06:09,800 Speaker 3: people come in at a younger age, they're independently living, 126 00:06:10,960 --> 00:06:14,600 Speaker 3: what's happened there is that we charge weekly fees to 127 00:06:14,640 --> 00:06:17,200 Speaker 3: cover all the artgoings, what's happened, and we fix that 128 00:06:17,240 --> 00:06:20,760 Speaker 3: for life, so to give surety for people. What's happened 129 00:06:20,839 --> 00:06:25,279 Speaker 3: is huge increases in insurance, huge increases in rates, electricity, 130 00:06:25,560 --> 00:06:27,920 Speaker 3: just the cost of getting a plumber in. So those 131 00:06:27,960 --> 00:06:31,400 Speaker 3: weekly costs have not kept up or they've gone past 132 00:06:31,440 --> 00:06:33,360 Speaker 3: what the residents are paying us. And when you fix 133 00:06:33,400 --> 00:06:35,960 Speaker 3: that for life, there's no way to climb back into that. 134 00:06:35,960 --> 00:06:38,920 Speaker 3: That's a contractual commitment we've made. So I talk about 135 00:06:38,920 --> 00:06:43,200 Speaker 3: the three flywheels. Those three three flywheels came unstuck with 136 00:06:43,400 --> 00:06:47,520 Speaker 3: Ryman slowly in part, and then we actually unveil five 137 00:06:47,600 --> 00:06:49,839 Speaker 3: years O. Every and goes when did that happen? And 138 00:06:49,920 --> 00:06:53,120 Speaker 3: in reality that was happening, And I think the kind 139 00:06:53,120 --> 00:06:55,680 Speaker 3: of equity market. I realized that three years ago when 140 00:06:55,680 --> 00:06:58,760 Speaker 3: the ship Rice started wigning, and it's continued to kind 141 00:06:58,760 --> 00:07:01,960 Speaker 3: of as we've exposed this, they're saying, Okay, I get that. 142 00:07:02,040 --> 00:07:03,800 Speaker 3: Now the kind of time to draw a line on 143 00:07:03,800 --> 00:07:06,640 Speaker 3: the sand. How do we improve from here? So it's 144 00:07:06,640 --> 00:07:08,360 Speaker 3: been a kind of a graduate. I don't think everyone 145 00:07:08,360 --> 00:07:12,560 Speaker 3: woke up and Ryman became poor financial performer. So I 146 00:07:12,600 --> 00:07:15,680 Speaker 3: think it's been a financial lens where it's been a disaster. 147 00:07:16,280 --> 00:07:19,320 Speaker 4: You asked our residents. They are still delighted with. 148 00:07:19,360 --> 00:07:21,600 Speaker 3: Our care and the area, which is fundamentally if we 149 00:07:21,760 --> 00:07:24,480 Speaker 3: make a mistake there, that's far different from making a 150 00:07:24,520 --> 00:07:27,360 Speaker 3: financial mistake. We can fix this piece, you can't fix 151 00:07:27,400 --> 00:07:30,280 Speaker 3: that reputational piece. So we're still scoring high in terms 152 00:07:30,280 --> 00:07:34,280 Speaker 3: of resident NPS, their families, you know, we're full, so 153 00:07:34,680 --> 00:07:36,480 Speaker 3: that part of the business is going well. Just a 154 00:07:36,480 --> 00:07:39,320 Speaker 3: financial performance piece has slowly to tear it and we 155 00:07:39,400 --> 00:07:40,679 Speaker 3: have to turn that quickly. 156 00:07:41,000 --> 00:07:42,960 Speaker 1: But you can't provide quality of care if you're not 157 00:07:43,000 --> 00:07:45,960 Speaker 1: a viable commercial operation. So is the latter now the 158 00:07:45,960 --> 00:07:46,880 Speaker 1: more immediate focus. 159 00:07:47,280 --> 00:07:49,280 Speaker 4: Yes, I think they have to coexist. 160 00:07:49,320 --> 00:07:52,680 Speaker 3: You know, we talk about great care and great financial performance. 161 00:07:53,200 --> 00:07:55,880 Speaker 3: It has become unbalanced and I don't think you have 162 00:07:55,960 --> 00:07:58,600 Speaker 3: to take that away to get that because ultimately that's 163 00:07:58,640 --> 00:08:01,160 Speaker 3: not sustainable either great funny performance and you're empty. 164 00:08:01,920 --> 00:08:02,880 Speaker 4: Yeah, that's not right off. 165 00:08:02,800 --> 00:08:06,560 Speaker 1: You wouldn't have great financial performance of direct good clarification. 166 00:08:06,640 --> 00:08:08,360 Speaker 4: So I think ultimately we need to be balanced. 167 00:08:08,640 --> 00:08:11,120 Speaker 3: How do we have great care, maintain a great care 168 00:08:11,480 --> 00:08:14,600 Speaker 3: and deliver great financial performance. And that's how Ryman used 169 00:08:14,600 --> 00:08:16,760 Speaker 3: to be and we have to give that back to 170 00:08:16,760 --> 00:08:17,239 Speaker 3: that level. 171 00:08:17,800 --> 00:08:19,560 Speaker 1: On the government stuff, that is one thing that you 172 00:08:19,600 --> 00:08:21,920 Speaker 1: obviously can't control. There is still a lot, as you mentioned, 173 00:08:21,960 --> 00:08:23,600 Speaker 1: with fees within your control, and I'm going to ask 174 00:08:23,600 --> 00:08:25,240 Speaker 1: you about your thoughts on that a little bit later on, 175 00:08:25,520 --> 00:08:27,200 Speaker 1: and also the mix of offering with care. 176 00:08:27,520 --> 00:08:28,840 Speaker 2: But if we can start at a pretty. 177 00:08:28,680 --> 00:08:32,520 Speaker 1: High level and look at the business model. There's actually 178 00:08:32,600 --> 00:08:36,160 Speaker 1: not much wrong with it on paper. It's obviously pretty lucrative. 179 00:08:36,160 --> 00:08:39,080 Speaker 1: I mean, the way it works is that you will 180 00:08:39,280 --> 00:08:42,599 Speaker 1: build villagers like this one, You'll sell the right to 181 00:08:42,640 --> 00:08:44,200 Speaker 1: occupy those units, then. 182 00:08:44,080 --> 00:08:46,240 Speaker 2: Also resell them to new residents. 183 00:08:46,240 --> 00:08:48,320 Speaker 1: When the others pass on, you clip the ticket on 184 00:08:48,360 --> 00:08:50,920 Speaker 1: all of those capital gains. It's worked once before you 185 00:08:50,960 --> 00:08:53,640 Speaker 1: were a market darling. It's obviously still working for other 186 00:08:53,720 --> 00:08:57,520 Speaker 1: operators in this industry. But why did this company feel 187 00:08:57,520 --> 00:09:00,800 Speaker 1: the need to leverage up so heavy and take on 188 00:09:01,320 --> 00:09:03,880 Speaker 1: billions of dollars in debt when it was obviously already 189 00:09:03,880 --> 00:09:04,520 Speaker 1: so lucrative. 190 00:09:04,720 --> 00:09:07,679 Speaker 4: Sure, I think there was a huge drive for growth. 191 00:09:07,920 --> 00:09:11,439 Speaker 3: The DNA of the place was all about fifteen percent growth. 192 00:09:11,440 --> 00:09:13,079 Speaker 3: It was a kind of a mantra when you're walking, 193 00:09:13,960 --> 00:09:15,640 Speaker 3: and that kind of works till it doesn't. If you 194 00:09:15,640 --> 00:09:18,400 Speaker 3: think about fifteen percent compounding, the number gets very big, 195 00:09:18,600 --> 00:09:21,320 Speaker 3: very quick, and so ultimately to keep up that level 196 00:09:21,360 --> 00:09:22,040 Speaker 3: of growth, you. 197 00:09:22,160 --> 00:09:23,640 Speaker 4: Ultimately take on more risk. 198 00:09:24,040 --> 00:09:26,760 Speaker 3: You want to build more villages, and so those things 199 00:09:27,080 --> 00:09:28,640 Speaker 3: ultimately work until they don't. 200 00:09:29,000 --> 00:09:30,680 Speaker 4: And so the numbers got so big. 201 00:09:30,720 --> 00:09:33,120 Speaker 3: You know, at the peak, we had fourteen villages under 202 00:09:33,120 --> 00:09:35,880 Speaker 3: construction like it was enormous, probably aiming for over one 203 00:09:35,880 --> 00:09:39,920 Speaker 3: thousand units and beds a year, and that just ultimately 204 00:09:39,960 --> 00:09:43,720 Speaker 3: big got beyond the capability. 205 00:09:43,080 --> 00:09:45,560 Speaker 4: Of the organization. So I kind of like to say 206 00:09:45,720 --> 00:09:46,640 Speaker 4: it worked till it didn't. 207 00:09:48,000 --> 00:09:51,240 Speaker 1: Analysts sounded the alarm on this as early as around 208 00:09:51,240 --> 00:09:52,600 Speaker 1: twenty eighteen, if not earlier. 209 00:09:53,040 --> 00:09:54,640 Speaker 2: In twenty nineteen, I wrote an. 210 00:09:54,600 --> 00:09:57,559 Speaker 1: Article based off their research that said that Ryman was 211 00:09:57,600 --> 00:10:00,840 Speaker 1: one retirement village operator on debt row. I've been doing 212 00:10:00,880 --> 00:10:02,680 Speaker 1: this show for a little over a year now, and 213 00:10:02,720 --> 00:10:04,600 Speaker 1: this is the second time I've had a high level 214 00:10:04,640 --> 00:10:07,000 Speaker 1: Ryman exec come on and have to have a mere 215 00:10:07,040 --> 00:10:07,840 Speaker 1: comper moments. 216 00:10:08,000 --> 00:10:10,439 Speaker 2: Sure, why should investors still faith in this company? Dean? 217 00:10:10,559 --> 00:10:12,360 Speaker 4: Yeah, No, that's a valid question. 218 00:10:12,440 --> 00:10:13,880 Speaker 3: I think at the end of the day, you know, 219 00:10:13,960 --> 00:10:18,080 Speaker 3: we have a great reputation amongst residents, which is fundamental. 220 00:10:18,200 --> 00:10:20,040 Speaker 3: You know, we rate the highest in New Zealand the 221 00:10:20,080 --> 00:10:23,760 Speaker 3: reader's digest rate, that we've got the highest corporate trust committity, sorry, 222 00:10:23,960 --> 00:10:27,200 Speaker 3: highest community trust in our brand, and so yeah, we 223 00:10:27,280 --> 00:10:28,120 Speaker 3: know that piece. 224 00:10:28,679 --> 00:10:30,160 Speaker 4: We do very very well. 225 00:10:30,200 --> 00:10:33,320 Speaker 3: So I think investors get that. If that was crumbling, 226 00:10:33,440 --> 00:10:35,240 Speaker 3: I think investors will be very nervous. 227 00:10:35,880 --> 00:10:36,480 Speaker 4: I think they have. 228 00:10:36,559 --> 00:10:39,559 Speaker 3: To gain confidence in the board. They had lost confidence 229 00:10:39,559 --> 00:10:42,080 Speaker 3: in the board and management. So we've kind of changed that, 230 00:10:42,920 --> 00:10:45,640 Speaker 3: and I think they're reading that this board is putting 231 00:10:45,720 --> 00:10:48,880 Speaker 3: much more urgency into that change, maybe more so than 232 00:10:48,920 --> 00:10:51,560 Speaker 3: they saw you two years ago or even one year ago. 233 00:10:51,640 --> 00:10:55,319 Speaker 3: So we left them with no uncertainty about that appetite. 234 00:10:55,360 --> 00:10:57,000 Speaker 3: And even as we look for a new CEO and 235 00:10:57,040 --> 00:10:59,640 Speaker 3: I'm temporarily in that seat, you know, we're not going 236 00:10:59,720 --> 00:11:00,520 Speaker 3: to sit idle. 237 00:11:00,960 --> 00:11:02,679 Speaker 4: We know what we need to do and we're kind 238 00:11:02,679 --> 00:11:03,480 Speaker 4: of leaning into it. 239 00:11:03,600 --> 00:11:06,200 Speaker 3: And that's certainly been the message we've been delivering to investors. 240 00:11:06,240 --> 00:11:07,920 Speaker 3: And you can deliver it and then they're going to 241 00:11:07,920 --> 00:11:10,320 Speaker 3: watch you, you know, show me, don't tell me. 242 00:11:10,440 --> 00:11:11,800 Speaker 4: So we're kind of in that mode now. 243 00:11:12,160 --> 00:11:13,880 Speaker 3: Look up with the line in the scene two mondays 244 00:11:13,880 --> 00:11:17,000 Speaker 3: ago with that reveal, and I think that will give 245 00:11:17,040 --> 00:11:18,800 Speaker 3: us a period of time to demonstrate that. 246 00:11:19,080 --> 00:11:21,080 Speaker 1: Well, let's talk about what you're doing, because as you mentioned, 247 00:11:21,080 --> 00:11:24,520 Speaker 1: the clean up is absolutely underway. On the valuation of assets, 248 00:11:24,559 --> 00:11:26,600 Speaker 1: you've reverted back to the old way of doing things, 249 00:11:26,760 --> 00:11:28,679 Speaker 1: looking at market rates. Can you talk me through that 250 00:11:28,760 --> 00:11:29,800 Speaker 1: decision how that was made? 251 00:11:29,880 --> 00:11:31,480 Speaker 3: Sure, so for a long period of time it was 252 00:11:31,520 --> 00:11:32,440 Speaker 3: independent valuation. 253 00:11:33,400 --> 00:11:34,240 Speaker 4: There's are large assets. 254 00:11:34,240 --> 00:11:36,560 Speaker 3: We've got twelve billion dollars worth of assets across New 255 00:11:36,640 --> 00:11:40,440 Speaker 3: Zealand and Australia. Industry norma is to use external values, 256 00:11:40,440 --> 00:11:42,120 Speaker 3: which is if you look at Key, we've properly that 257 00:11:42,120 --> 00:11:43,360 Speaker 3: everyone uses external values. 258 00:11:43,400 --> 00:11:45,040 Speaker 4: That's the appropriate thing to do. 259 00:11:45,120 --> 00:11:48,240 Speaker 3: So we do that to value our retirement villages and 260 00:11:48,240 --> 00:11:51,160 Speaker 3: the key apiece because they've got quite different dynamics, so 261 00:11:51,200 --> 00:11:53,040 Speaker 3: we get different values to value. 262 00:11:53,000 --> 00:11:55,520 Speaker 4: Both pieces and added together to create the village. 263 00:11:55,960 --> 00:11:59,800 Speaker 3: And then a few years ago directors came and said 264 00:12:00,080 --> 00:12:03,360 Speaker 3: where they took a view that said, hey, there is 265 00:12:03,679 --> 00:12:06,040 Speaker 3: we believe under fear value. You have to use a 266 00:12:06,040 --> 00:12:09,360 Speaker 3: market participant test. It's a very technical point and their 267 00:12:09,480 --> 00:12:12,160 Speaker 3: view market participant would change the way in which you 268 00:12:12,280 --> 00:12:14,320 Speaker 3: priced the occupational right. 269 00:12:14,600 --> 00:12:17,840 Speaker 1: Which effectively inflated the value of their assets on paper 270 00:12:17,880 --> 00:12:18,880 Speaker 1: and made them look pretty good. 271 00:12:19,160 --> 00:12:22,199 Speaker 2: Right, was that financial mistmanagement? 272 00:12:22,600 --> 00:12:25,520 Speaker 3: Ah, these things aren't policy, are judgment. 273 00:12:25,679 --> 00:12:25,880 Speaker 2: You know. 274 00:12:25,920 --> 00:12:28,560 Speaker 3: At the time they did that, I Show's equity would 275 00:12:28,559 --> 00:12:31,200 Speaker 3: have been now four over four billion dollars at the time. 276 00:12:31,240 --> 00:12:35,040 Speaker 3: It would have changed the value by taking the independent 277 00:12:35,080 --> 00:12:38,640 Speaker 3: valuers approach and then layering above that are thirty percent 278 00:12:38,880 --> 00:12:41,600 Speaker 3: MF for future residents, not the current twenty That created 279 00:12:41,600 --> 00:12:43,480 Speaker 3: at the time about three hundred million dollars of additional 280 00:12:43,520 --> 00:12:46,640 Speaker 3: equity on four billion, So it's not like you trebled 281 00:12:46,640 --> 00:12:49,240 Speaker 3: the size of it. Did that change the way in 282 00:12:49,280 --> 00:12:51,680 Speaker 3: which people whether that changed the way people bought or 283 00:12:51,720 --> 00:12:55,240 Speaker 3: sold the stock, that's questionable. It was a judgment made 284 00:12:55,280 --> 00:12:59,880 Speaker 3: at the time. I wasn't there. Directors got comfortable. The 285 00:13:00,120 --> 00:13:04,160 Speaker 3: order to got comfortable, this board said, actually, directors shouldn't 286 00:13:04,160 --> 00:13:06,320 Speaker 3: be valuing their assets. You know, we should leave that 287 00:13:06,360 --> 00:13:09,160 Speaker 3: to the independent value. Let their independent value decide what 288 00:13:09,200 --> 00:13:12,000 Speaker 3: the market participant will do. And when we ask our 289 00:13:12,040 --> 00:13:14,800 Speaker 3: value what that is and their view is that's your 290 00:13:14,840 --> 00:13:17,680 Speaker 3: current contract. The best guess of what a market participant 291 00:13:17,679 --> 00:13:20,280 Speaker 3: will do would give a new resident the same contract 292 00:13:20,280 --> 00:13:21,640 Speaker 3: you gave the last resident. 293 00:13:21,840 --> 00:13:23,480 Speaker 4: And we've just stepped back and said, okay, that's what 294 00:13:23,520 --> 00:13:23,800 Speaker 4: it is. 295 00:13:23,960 --> 00:13:25,160 Speaker 2: So what do you do with your auditors? Do you 296 00:13:25,280 --> 00:13:25,800 Speaker 2: roll them to. 297 00:13:26,200 --> 00:13:28,760 Speaker 3: While they got comfortable at the time, You know, we 298 00:13:28,840 --> 00:13:31,160 Speaker 3: are as we've announced our last Monday, and I think 299 00:13:31,200 --> 00:13:33,559 Speaker 3: it's independent of that. I wouldn't tie those two pieces together. 300 00:13:33,679 --> 00:13:37,600 Speaker 3: Delloitte has been the auditor for the place forever. They 301 00:13:38,040 --> 00:13:40,440 Speaker 3: have rotated their order partners as they have to do 302 00:13:40,559 --> 00:13:42,680 Speaker 3: under inside X rules, so that's fine. 303 00:13:43,240 --> 00:13:45,360 Speaker 4: We just think it's time to refresh that. 304 00:13:45,480 --> 00:13:47,640 Speaker 3: So we're in the middle of an audit tender now 305 00:13:48,320 --> 00:13:50,719 Speaker 3: we've committed to investors that won't be led out of. 306 00:13:50,720 --> 00:13:52,240 Speaker 4: Christ Church in the future. 307 00:13:52,240 --> 00:13:53,960 Speaker 3: It is a real sense when I came on board 308 00:13:54,000 --> 00:13:57,120 Speaker 3: the investor feedback it had become quite a christ Church 309 00:13:57,440 --> 00:14:04,760 Speaker 3: centric business. Directors, management, lawyers, accountants, auditors. Yeah, and there 310 00:14:04,800 --> 00:14:07,440 Speaker 3: was a sense that that had become quite insular in 311 00:14:07,520 --> 00:14:11,560 Speaker 3: that and whether they was being as objective as it 312 00:14:11,600 --> 00:14:16,800 Speaker 3: could be. So we've purposely changed that quite significantly, being 313 00:14:16,840 --> 00:14:18,959 Speaker 3: able to changed the board. Every new board member we've 314 00:14:19,040 --> 00:14:24,600 Speaker 3: hired not christ Church based. The management team we have changed. 315 00:14:24,680 --> 00:14:27,720 Speaker 3: The CEO, CFO, the head of Treasury, the head of 316 00:14:27,720 --> 00:14:30,320 Speaker 3: Customers are half the leadership team and that's for yep, 317 00:14:30,360 --> 00:14:34,680 Speaker 3: that's half the leadership team has changed. We haven't replaced 318 00:14:34,760 --> 00:14:37,520 Speaker 3: the CEO, but that's that's half changed as well. And 319 00:14:37,560 --> 00:14:40,080 Speaker 3: we're running an RFP now so that that will definitely 320 00:14:40,120 --> 00:14:41,200 Speaker 3: not be run out of christ Tach. 321 00:14:41,240 --> 00:14:43,360 Speaker 4: We've told them you cannot run it out of christ Church. 322 00:14:43,960 --> 00:14:44,840 Speaker 4: Changed our lawyers. 323 00:14:45,040 --> 00:14:47,680 Speaker 3: So you know, we are going through methodically saying actually 324 00:14:47,800 --> 00:14:49,240 Speaker 3: it's time to put the line in the sand. 325 00:14:49,240 --> 00:14:51,400 Speaker 4: We hear you. We will do the change. 326 00:14:51,240 --> 00:14:52,840 Speaker 2: You've brought the broom in effect we have. 327 00:14:52,920 --> 00:14:54,800 Speaker 3: Yeah, we were asked to. You know, it was kind 328 00:14:54,800 --> 00:14:57,440 Speaker 3: of and it needed it. You know, I think not 329 00:14:57,560 --> 00:15:01,040 Speaker 3: everything was broken though I'm not sitting here everybody perform 330 00:15:01,120 --> 00:15:02,000 Speaker 3: me under the bus. 331 00:15:02,080 --> 00:15:02,840 Speaker 4: That's not right. 332 00:15:02,960 --> 00:15:05,560 Speaker 3: There was a lot of good things happening, but there's 333 00:15:05,560 --> 00:15:07,120 Speaker 3: a point in time metics and I think where there 334 00:15:07,120 --> 00:15:09,360 Speaker 3: are it's time for change, and it was definitely a 335 00:15:09,360 --> 00:15:10,120 Speaker 3: time for change. 336 00:15:10,280 --> 00:15:13,200 Speaker 1: Another number, so forcing your management managers have left. Another 337 00:15:13,280 --> 00:15:16,040 Speaker 1: number five is the amount of developments that you've effectively 338 00:15:16,040 --> 00:15:16,800 Speaker 1: pulled the pin on. 339 00:15:17,280 --> 00:15:20,200 Speaker 2: So three of those you have paused build. 340 00:15:19,960 --> 00:15:23,000 Speaker 1: On until you've rolled back into the land development pipeline corrects. 341 00:15:23,520 --> 00:15:26,080 Speaker 3: We're going to we've got a land bank whereby we're 342 00:15:26,080 --> 00:15:29,920 Speaker 3: putting three up for sale. You know they Now part 343 00:15:29,920 --> 00:15:32,560 Speaker 3: of our issue around the development piece was as we 344 00:15:32,560 --> 00:15:35,840 Speaker 3: build these, the flywheel piece when I talked about the 345 00:15:36,000 --> 00:15:38,320 Speaker 3: care the retire piece and the new village piece, when 346 00:15:38,320 --> 00:15:42,040 Speaker 3: they go all together, that's old Ryman the new development piece. 347 00:15:42,040 --> 00:15:44,680 Speaker 4: As we're building these large, beautiful villages. 348 00:15:44,720 --> 00:15:46,880 Speaker 3: You go to Mirriam Corbyn, you go to Keith Park, 349 00:15:47,440 --> 00:15:49,240 Speaker 3: you go to Murray Hellberg, you. 350 00:15:49,200 --> 00:15:50,880 Speaker 4: Go to Australia's beautiful big villages. 351 00:15:51,960 --> 00:15:54,040 Speaker 3: What the model needs to work is when you build 352 00:15:54,080 --> 00:15:57,680 Speaker 3: it and you introduce the new residents, that first occupational 353 00:15:57,760 --> 00:16:03,960 Speaker 3: right effectively funds the development and so therefore the future 354 00:16:03,960 --> 00:16:06,800 Speaker 3: capital gains on it fall to equity holders. So that's 355 00:16:06,840 --> 00:16:09,720 Speaker 3: the theory, and then that stopped for wrong. We started 356 00:16:09,720 --> 00:16:14,040 Speaker 3: building these massive, big villages and in the complexity of COVID, 357 00:16:14,480 --> 00:16:17,240 Speaker 3: we didn't have that fly we were working. So what 358 00:16:17,320 --> 00:16:20,160 Speaker 3: happened was a village might have cost us three hundred 359 00:16:20,280 --> 00:16:21,480 Speaker 3: We might have thought it was going to cost us 360 00:16:21,480 --> 00:16:23,320 Speaker 3: three hundred million. By the time we've finished it was 361 00:16:23,320 --> 00:16:26,160 Speaker 3: four hundred million. When we sell down the occupational rights, 362 00:16:26,200 --> 00:16:28,480 Speaker 3: it's three hundred million still. So we've got one hundred 363 00:16:28,480 --> 00:16:31,600 Speaker 3: million of bank debt and if you do that ten times, 364 00:16:32,040 --> 00:16:34,760 Speaker 3: that's a billion. So it doesn't take long for that 365 00:16:34,960 --> 00:16:36,880 Speaker 3: to build up, and you know, when you're half out 366 00:16:36,920 --> 00:16:40,520 Speaker 3: of the ground, it's very hard to stop. Probably when 367 00:16:40,520 --> 00:16:42,440 Speaker 3: we talk about the net present value from from that 368 00:16:42,440 --> 00:16:44,600 Speaker 3: point in time, the net present you're better off to finish. 369 00:16:44,880 --> 00:16:46,720 Speaker 4: It's like half build a house wat should. 370 00:16:46,520 --> 00:16:48,760 Speaker 1: Otherwise at the sun cost and it actually lose millions. 371 00:16:48,480 --> 00:16:50,280 Speaker 3: Of dollars trying to sell a half bill bill. That's 372 00:16:50,320 --> 00:16:52,400 Speaker 3: not easy to be done. So at that point in time, 373 00:16:52,440 --> 00:16:54,840 Speaker 3: you are where you are, you're better to finish. And 374 00:16:54,880 --> 00:16:57,480 Speaker 3: so but as a result of that, we've accumulated debt. 375 00:16:57,800 --> 00:17:00,160 Speaker 3: So again we are where we are with that. When 376 00:17:00,160 --> 00:17:02,280 Speaker 3: you do become profit and pay that down, but the 377 00:17:02,320 --> 00:17:05,000 Speaker 3: next sped in the ground, we cannot. We need to 378 00:17:05,040 --> 00:17:06,879 Speaker 3: be very disciplined on what we build. 379 00:17:07,480 --> 00:17:10,240 Speaker 1: And that discipline also looks like suspending the dividend, which 380 00:17:10,320 --> 00:17:13,360 Speaker 1: previously might add was being paid from no free operating 381 00:17:13,400 --> 00:17:16,120 Speaker 1: cash flow. Is that a decision that you personally made. 382 00:17:16,280 --> 00:17:17,960 Speaker 4: Well, you never personally make those things? 383 00:17:17,960 --> 00:17:19,360 Speaker 2: Are the board the chair? 384 00:17:19,440 --> 00:17:21,600 Speaker 4: Yeah? Yeah, but ultimately at. 385 00:17:21,520 --> 00:17:24,320 Speaker 3: A board level it's majority rules, so you never you 386 00:17:24,320 --> 00:17:27,040 Speaker 3: shouldn't have a direct a single director or a chair 387 00:17:27,119 --> 00:17:30,159 Speaker 3: making those decisions. So the board took that decision. The 388 00:17:30,280 --> 00:17:32,600 Speaker 3: view was that was financially prudent to do that, and 389 00:17:32,600 --> 00:17:35,600 Speaker 3: we were borrowing to do it. And also one of 390 00:17:35,600 --> 00:17:39,560 Speaker 3: the advantages of the retired village model is that you 391 00:17:40,000 --> 00:17:42,920 Speaker 3: don't pay a lot of tax because essentially we don't 392 00:17:42,960 --> 00:17:43,520 Speaker 3: sell anything. 393 00:17:44,400 --> 00:17:46,680 Speaker 4: We sell licenses to occupy the. 394 00:17:46,600 --> 00:17:47,359 Speaker 2: Great business to be. 395 00:17:47,760 --> 00:17:51,600 Speaker 3: Yeah, So therefore paying a dividend out, you get taxed 396 00:17:51,640 --> 00:17:53,439 Speaker 3: on that, so we write the check on your behalf 397 00:17:53,480 --> 00:17:54,040 Speaker 3: to the government. 398 00:17:54,040 --> 00:17:55,440 Speaker 4: So there's a kind of a tax leakage. 399 00:17:55,480 --> 00:17:59,600 Speaker 3: There was my view of where creating economic value, you're 400 00:17:59,640 --> 00:18:02,680 Speaker 3: better than leave that money in the organization rather than 401 00:18:02,720 --> 00:18:05,120 Speaker 3: borrowing it to pay you and by the way, giving 402 00:18:05,119 --> 00:18:07,239 Speaker 3: some to the government. That just looks so inefficient to 403 00:18:07,320 --> 00:18:09,440 Speaker 3: us that we've paused at for a couple of years. 404 00:18:09,440 --> 00:18:11,440 Speaker 3: So we'll revisit that in two years time. 405 00:18:11,320 --> 00:18:14,160 Speaker 1: And have that hopefully effectively flow through to the valuation 406 00:18:14,200 --> 00:18:16,399 Speaker 1: of the share price and equity holders feel that return 407 00:18:16,440 --> 00:18:16,880 Speaker 1: in that way. 408 00:18:17,040 --> 00:18:17,840 Speaker 4: Yeah. 409 00:18:17,840 --> 00:18:20,399 Speaker 3: Well, ultimately we've taken the yield away from them, so 410 00:18:20,440 --> 00:18:23,080 Speaker 3: we need to deliver capital growth. But we're not saying 411 00:18:23,080 --> 00:18:25,440 Speaker 3: divids off the table forever, but we need to generate 412 00:18:25,520 --> 00:18:27,119 Speaker 3: earnings to be able to part. That's the only way 413 00:18:27,160 --> 00:18:29,960 Speaker 3: you sustainably create a dividend. You've got to earn it 414 00:18:30,480 --> 00:18:32,200 Speaker 3: to pay it. Very simply, you. 415 00:18:32,160 --> 00:18:33,720 Speaker 1: Saig not in your recent result that there may be 416 00:18:33,760 --> 00:18:36,199 Speaker 1: some more cost efficiencies to camp. If you've pulled the 417 00:18:36,240 --> 00:18:38,080 Speaker 1: pin on a number of those developments and you're going 418 00:18:38,080 --> 00:18:40,080 Speaker 1: to be selling some land, then you obviously need less 419 00:18:40,080 --> 00:18:42,560 Speaker 1: people to manage those projects. Yes, so where do you 420 00:18:42,560 --> 00:18:44,320 Speaker 1: think you could cut those costs? What does that actually 421 00:18:44,359 --> 00:18:44,720 Speaker 1: look like? 422 00:18:45,280 --> 00:18:45,560 Speaker 4: Yeah? 423 00:18:45,600 --> 00:18:48,199 Speaker 3: Sure, So you know, we look at our business in 424 00:18:48,240 --> 00:18:49,439 Speaker 3: a couple of ways. We look at what we do 425 00:18:49,480 --> 00:18:53,320 Speaker 3: at a village because ultimately we have to be resident centering, 426 00:18:53,440 --> 00:18:56,600 Speaker 3: no resident, no rymen. So you have to keep that 427 00:18:56,680 --> 00:19:00,240 Speaker 3: person mum and Dad's you know that sounds old well, 428 00:19:00,400 --> 00:19:02,440 Speaker 3: but actually it's a very good doctrine. You know, it 429 00:19:02,520 --> 00:19:03,800 Speaker 3: is a good enough for mombday and you have to 430 00:19:03,840 --> 00:19:06,080 Speaker 3: have that at the center. And the second piece you 431 00:19:06,080 --> 00:19:07,639 Speaker 3: have to do is actually everything that the village is 432 00:19:07,680 --> 00:19:10,280 Speaker 3: critically important. This is where we make our money. This 433 00:19:10,320 --> 00:19:12,119 Speaker 3: is where we get paid to do the care. This 434 00:19:12,200 --> 00:19:14,480 Speaker 3: is where they deliver us their weeklies in their DMF. 435 00:19:14,920 --> 00:19:16,920 Speaker 3: You know, this is where we get the capital gain. 436 00:19:17,480 --> 00:19:19,440 Speaker 3: So that's the frame where we have and then outside 437 00:19:19,480 --> 00:19:21,560 Speaker 3: of that, what are we doing Are we adding value? 438 00:19:21,600 --> 00:19:22,320 Speaker 4: Do we need to do that? 439 00:19:22,400 --> 00:19:25,800 Speaker 3: Because ultimately everything detracts from that piece and is a cost. 440 00:19:26,640 --> 00:19:30,680 Speaker 3: So I think there'll be opportunity outside of the village primarily. 441 00:19:30,800 --> 00:19:33,400 Speaker 3: You know, we've gone to Australia, we've created overhead, We've 442 00:19:33,440 --> 00:19:36,720 Speaker 3: got lots of regional models here. That's a work in 443 00:19:36,760 --> 00:19:39,400 Speaker 3: progress matter, and we need to steer at that. We've 444 00:19:39,400 --> 00:19:43,760 Speaker 3: grown overhead faster than we've grown resident numbers. So a 445 00:19:43,920 --> 00:19:47,840 Speaker 3: simple person lot myself doing that metric that doesn't feel right. 446 00:19:48,160 --> 00:19:50,199 Speaker 4: So we've tasked the team to go back in and 447 00:19:50,520 --> 00:19:51,120 Speaker 4: look at that. 448 00:19:51,359 --> 00:19:54,320 Speaker 1: Nineteen percent increase alone to one hundred and seventy two 449 00:19:54,359 --> 00:19:58,400 Speaker 1: million dollars. I believe in non village it's a cost. Yes, 450 00:19:58,560 --> 00:19:59,639 Speaker 1: what do you want to see that down to. 451 00:20:00,480 --> 00:20:05,080 Speaker 3: We haven't guided to that, so lower is the answer. Yeah, 452 00:20:05,119 --> 00:20:07,760 Speaker 3: we've set some internal targets. We haven't shared that externally yet, 453 00:20:07,760 --> 00:20:11,520 Speaker 3: but we certainly see the need to right size that 454 00:20:11,680 --> 00:20:13,520 Speaker 3: piece as part of that whole equation. 455 00:20:13,840 --> 00:20:17,080 Speaker 1: You've spoken about the weekly fee and how that fixed 456 00:20:17,080 --> 00:20:20,439 Speaker 1: option is clearly unsustainable going forward, but there's also the 457 00:20:20,440 --> 00:20:23,080 Speaker 1: deferred management fee. Ryman charge is one much lower than 458 00:20:23,160 --> 00:20:25,640 Speaker 1: others on the market. Yours is twenty percent, Summer sets 459 00:20:25,680 --> 00:20:29,080 Speaker 1: twenty five. I hear other operators around thirty percent. How 460 00:20:29,119 --> 00:20:30,800 Speaker 1: are you thinking about that going forward? 461 00:20:30,920 --> 00:20:33,159 Speaker 3: If it needs to change, sure, And I think you 462 00:20:33,240 --> 00:20:35,959 Speaker 3: can't look at those things in isolation, which has been 463 00:20:36,040 --> 00:20:38,320 Speaker 3: part of the kind of investor criticism of the old 464 00:20:38,520 --> 00:20:41,120 Speaker 3: board saying oh, let's just move to thirty for future residents, 465 00:20:41,160 --> 00:20:43,840 Speaker 3: because you don't operate in a vacuum. So we think 466 00:20:43,880 --> 00:20:46,320 Speaker 3: of those three, there's a couple of things. 467 00:20:46,359 --> 00:20:49,880 Speaker 4: One, what is the price of the license to occupy? 468 00:20:50,200 --> 00:20:53,080 Speaker 3: And so we think our product is better than the 469 00:20:53,080 --> 00:20:54,760 Speaker 3: majority of people in the market. 470 00:20:55,119 --> 00:20:56,480 Speaker 4: US you're going to get a very high. 471 00:20:56,400 --> 00:20:59,480 Speaker 3: End product like a Hallia or the one up and 472 00:20:59,520 --> 00:21:00,840 Speaker 3: par now or. 473 00:21:00,680 --> 00:21:03,240 Speaker 4: What Winton's building, but that's quite rarefied. 474 00:21:03,320 --> 00:21:06,080 Speaker 3: Yeah, that's not what we're chasing, you know, And so 475 00:21:06,680 --> 00:21:09,640 Speaker 3: you can look to achieve those things. But in our 476 00:21:09,800 --> 00:21:13,200 Speaker 3: kind of compete our product, we believe we are getting 477 00:21:13,240 --> 00:21:15,399 Speaker 3: a higher price for it, and that's important because that's 478 00:21:15,440 --> 00:21:18,240 Speaker 3: the money that comes in. Then what do we charge 479 00:21:18,280 --> 00:21:20,560 Speaker 3: is the deferred management fee, which is essentially the rental 480 00:21:20,840 --> 00:21:24,760 Speaker 3: on that we keep that at the end, so the 481 00:21:24,760 --> 00:21:27,280 Speaker 3: reason knows what we're going to keep when they depart 482 00:21:27,400 --> 00:21:28,040 Speaker 3: or move through. 483 00:21:29,359 --> 00:21:31,800 Speaker 4: And then there's a weekly So when we. 484 00:21:31,760 --> 00:21:34,920 Speaker 3: Talk to a resident or a potential reason, they look 485 00:21:34,960 --> 00:21:37,560 Speaker 3: at all of those three things, what's the price, how 486 00:21:37,640 --> 00:21:39,160 Speaker 3: much you're going to take for rent. 487 00:21:39,080 --> 00:21:41,359 Speaker 4: And what's my weekly fee. They're sitting there with their family. 488 00:21:41,800 --> 00:21:44,879 Speaker 3: They've all had a designer occupation that has to be 489 00:21:45,040 --> 00:21:47,439 Speaker 3: reviewed by lawyer. So it's not just sitting there with 490 00:21:47,480 --> 00:21:50,639 Speaker 3: mum in the corner and handing over the pen. It's 491 00:21:50,680 --> 00:21:54,040 Speaker 3: quite a process. So they're getting an educated view, and 492 00:21:54,200 --> 00:21:57,360 Speaker 3: ultimately they're comparing. They might look at Logan Campbell here, 493 00:21:57,440 --> 00:21:59,040 Speaker 3: they might go down the road and look at something else. 494 00:22:00,400 --> 00:22:03,800 Speaker 3: You have to be competitive in that set, and so 495 00:22:03,920 --> 00:22:06,119 Speaker 3: we need to look at all of those three things together. 496 00:22:06,800 --> 00:22:10,640 Speaker 3: I think we can improve the combined package. 497 00:22:10,960 --> 00:22:12,040 Speaker 4: More so the. 498 00:22:12,040 --> 00:22:15,320 Speaker 3: Fixed weekly fee, I don't mind. That concept is what 499 00:22:15,359 --> 00:22:18,239 Speaker 3: you fix it at. You know, traditionally you'd fix that 500 00:22:18,400 --> 00:22:20,919 Speaker 3: at today's rate to pay for everything, and then inflate 501 00:22:20,960 --> 00:22:23,200 Speaker 3: it a little bit and go, okay, that's the rate. 502 00:22:24,320 --> 00:22:25,800 Speaker 3: So you know, if you're assume they're going to be 503 00:22:25,800 --> 00:22:28,600 Speaker 3: here for seven, eight, nine years, you kind of captured inflation. 504 00:22:29,400 --> 00:22:31,120 Speaker 4: That's all good till your rates. 505 00:22:30,920 --> 00:22:32,919 Speaker 3: Go up by twenty percent and your insurance goes up 506 00:22:32,960 --> 00:22:35,120 Speaker 3: by twenty percent. That's you go, oh my god, what's 507 00:22:35,160 --> 00:22:39,160 Speaker 3: happened here? So and that has really outpaced over quite 508 00:22:39,200 --> 00:22:40,240 Speaker 3: a period of time. 509 00:22:40,080 --> 00:22:42,080 Speaker 4: Our weekly fees. We've in New Zealand. 510 00:22:41,840 --> 00:22:44,119 Speaker 3: Got two and a half thousand residents paying one hundred 511 00:22:44,160 --> 00:22:46,679 Speaker 3: and ten dollars a week, when if you move into 512 00:22:47,560 --> 00:22:50,000 Speaker 3: Logan Campbell tomorrow you're probly paid two twenty. 513 00:22:50,160 --> 00:22:51,840 Speaker 4: So we've got a kind of an enormous. 514 00:22:51,520 --> 00:22:55,880 Speaker 3: Drag through that through people who were inflation has gone 515 00:22:55,920 --> 00:22:58,200 Speaker 3: well passed, so we reset those quarterlyes. 516 00:22:58,200 --> 00:22:59,280 Speaker 4: But you can't go backwards. 517 00:23:00,000 --> 00:23:02,080 Speaker 3: So you know, when you've got people staying here for seven, 518 00:23:02,119 --> 00:23:05,680 Speaker 3: eight nine years on average, you know you get that wrong. 519 00:23:05,880 --> 00:23:09,200 Speaker 3: You've got you know, eight thousand people on a different 520 00:23:09,240 --> 00:23:10,960 Speaker 3: rate than what you wanted to be. So you can 521 00:23:11,000 --> 00:23:13,639 Speaker 3: correct that though because every year a thousand new people 522 00:23:13,680 --> 00:23:15,879 Speaker 3: come into our site. So you know the best time 523 00:23:15,960 --> 00:23:19,520 Speaker 3: to change is tomorrow or today. So yes, we'll look 524 00:23:19,520 --> 00:23:21,560 Speaker 3: at that as a package. And again we've got a 525 00:23:21,560 --> 00:23:22,360 Speaker 3: group looking at that. 526 00:23:22,400 --> 00:23:24,040 Speaker 4: What's the right way to go? 527 00:23:24,200 --> 00:23:27,159 Speaker 3: Where is where's the elasticity because you don't want to 528 00:23:27,160 --> 00:23:30,560 Speaker 3: lose occupancy, no resident, no wrong, So you know you 529 00:23:30,680 --> 00:23:33,560 Speaker 3: have to have a person paying the DMF paying the weekly. 530 00:23:34,080 --> 00:23:36,359 Speaker 1: Is it true that you're trialing a bit of a 531 00:23:36,359 --> 00:23:39,960 Speaker 1: different mix where an incoming resident can pay more in 532 00:23:40,040 --> 00:23:42,399 Speaker 1: their upfront unit price and then at least in their 533 00:23:42,400 --> 00:23:44,680 Speaker 1: deferred management fee later on and vice versa. 534 00:23:44,800 --> 00:23:48,680 Speaker 3: Yes, we've tried that mainly through when people because there's 535 00:23:48,720 --> 00:23:52,879 Speaker 3: a challenging property market. So people may think they're going 536 00:23:52,920 --> 00:23:56,119 Speaker 3: to sell their house in epsom it's at a million dollars, 537 00:23:56,320 --> 00:23:59,000 Speaker 3: so they feel good about buying or for us at 538 00:23:59,320 --> 00:24:02,760 Speaker 3: nine hundred, eight hundred thousand, that's fine. It's a different 539 00:24:02,840 --> 00:24:05,440 Speaker 3: quality of service. Although that's the fine with that, they 540 00:24:05,440 --> 00:24:08,960 Speaker 3: go to auction, doesn't clear. Okay, that's not so good. 541 00:24:09,480 --> 00:24:11,440 Speaker 3: Then they go through a sale and they might get 542 00:24:11,560 --> 00:24:14,440 Speaker 3: nine hundred thousand dollars, so they say, actually, I thought 543 00:24:14,440 --> 00:24:16,040 Speaker 3: I had the nine hundred thousand. I really I don't 544 00:24:16,080 --> 00:24:17,520 Speaker 3: want to put all of that into or because they 545 00:24:17,560 --> 00:24:20,480 Speaker 3: have to pay my weeklies. So we might say okay, 546 00:24:20,640 --> 00:24:23,719 Speaker 3: on that basis, we might go from nine hundred to 547 00:24:23,960 --> 00:24:27,040 Speaker 3: eight fifty, but your DMF will now be twenty five 548 00:24:27,119 --> 00:24:27,880 Speaker 3: or thirty. 549 00:24:27,640 --> 00:24:29,760 Speaker 2: And that effectively comes out of there. In Harrison's later on. 550 00:24:29,800 --> 00:24:31,720 Speaker 3: Yes, yeah, so it's a kind of you can't quite 551 00:24:31,720 --> 00:24:34,520 Speaker 3: afford the price today, but we'll take higher rent from you. 552 00:24:34,560 --> 00:24:37,959 Speaker 3: In the meantime, such set sounds quite we're kind of mpving, 553 00:24:38,119 --> 00:24:41,560 Speaker 3: we're kind of neutral to that. So we've found that 554 00:24:41,760 --> 00:24:43,720 Speaker 3: has worked, but it's an interesting cohort that that's a 555 00:24:43,800 --> 00:24:45,960 Speaker 3: cohort of people who haven't quite got enough money to 556 00:24:46,000 --> 00:24:46,400 Speaker 3: come in. 557 00:24:47,119 --> 00:24:48,760 Speaker 1: So are you seeing that more so now given the 558 00:24:48,760 --> 00:24:50,480 Speaker 1: state of the housing market and it's taken longer for 559 00:24:50,480 --> 00:24:52,120 Speaker 1: people to sell their homes on the market too. 560 00:24:52,200 --> 00:24:59,000 Speaker 3: So last year across Australasia we sold fifteen hundred occupational rights, 561 00:24:59,200 --> 00:25:01,760 Speaker 3: so no one's more than that. So yeah, the product's great, 562 00:25:01,800 --> 00:25:04,160 Speaker 3: we are selling them. We only did that on ninety 563 00:25:04,680 --> 00:25:08,560 Speaker 3: of the transactions, so what's that seven percent of the transaction? 564 00:25:08,640 --> 00:25:11,720 Speaker 3: So we don't see that running away. But the twenty 565 00:25:11,760 --> 00:25:13,359 Speaker 3: twenty four is supposed to be a great year. 566 00:25:14,240 --> 00:25:15,359 Speaker 4: It's turning out not to be. 567 00:25:15,480 --> 00:25:16,960 Speaker 3: You know, when I first came on board in twenty 568 00:25:17,000 --> 00:25:21,879 Speaker 3: twenty three, we're expecting industrations to declining housing markets improving. 569 00:25:22,480 --> 00:25:25,520 Speaker 3: That has not occurred. So twenty fours feeling like twenty three, 570 00:25:25,600 --> 00:25:29,239 Speaker 3: if not slightly tougher. Actually, you know, unemployment's going up, 571 00:25:29,240 --> 00:25:31,159 Speaker 3: which is what the Reserve Band want to be able 572 00:25:31,200 --> 00:25:33,359 Speaker 3: to drive down inflation therefore drive down interest rates, So 573 00:25:33,400 --> 00:25:35,919 Speaker 3: you can just see that playing out that So I 574 00:25:36,040 --> 00:25:39,600 Speaker 3: think it'll be quite a sober next six months in 575 00:25:39,640 --> 00:25:41,159 Speaker 3: New Zealand. So whether that has to pick up a 576 00:25:41,200 --> 00:25:45,240 Speaker 3: little bit, I'm not sure now. It certainly feels generally 577 00:25:45,240 --> 00:25:46,879 Speaker 3: tough in New Zealand at the moment. If you are 578 00:25:46,960 --> 00:25:48,160 Speaker 3: consumer facing. 579 00:25:48,040 --> 00:25:50,879 Speaker 1: I completely agree, and you're actually across many businesses as well, 580 00:25:51,000 --> 00:25:54,040 Speaker 1: in fact, mentioning that you are also involved in some others. 581 00:25:54,040 --> 00:25:55,320 Speaker 2: Are you still involved with the warehouse? 582 00:25:55,600 --> 00:25:56,280 Speaker 4: Yes, I'm on the board. 583 00:25:56,840 --> 00:25:58,280 Speaker 1: If you're not only asking because I was going to 584 00:25:58,280 --> 00:25:59,920 Speaker 1: mix this in with asking about how your search for 585 00:26:00,080 --> 00:26:02,360 Speaker 1: or a current CEO here is going, you're also looking 586 00:26:02,400 --> 00:26:04,440 Speaker 1: for another warehouse. It's a tough time to be looking 587 00:26:04,480 --> 00:26:07,199 Speaker 1: for a good CEO, and there seems to be the 588 00:26:07,240 --> 00:26:09,760 Speaker 1: case of disappearing CEOs across the New Zealand market at 589 00:26:10,119 --> 00:26:12,920 Speaker 1: at the moment. So specifically, what attributes you're looking for 590 00:26:13,000 --> 00:26:16,200 Speaker 1: here and how is the CEO executive search going across 591 00:26:16,200 --> 00:26:17,200 Speaker 1: the market more generally? 592 00:26:17,440 --> 00:26:20,480 Speaker 3: Sure, Sure, it's interesting it has been a coincidence of 593 00:26:20,760 --> 00:26:24,080 Speaker 3: CEOs going, isn't it. I think I think a combination 594 00:26:24,320 --> 00:26:28,399 Speaker 3: of boards being stronger and ultimately the key thing for 595 00:26:28,440 --> 00:26:31,639 Speaker 3: a board is to appoint and sendivise and remove a 596 00:26:31,680 --> 00:26:35,560 Speaker 3: CEO if you don't get that right, you know, I've 597 00:26:35,600 --> 00:26:38,320 Speaker 3: never seen a board perform really well with a poor 598 00:26:38,359 --> 00:26:42,120 Speaker 3: CEO that just doesn't organizationally happen. I've seen the other 599 00:26:42,119 --> 00:26:44,560 Speaker 3: way around, but I haven't seen it just with a 600 00:26:45,040 --> 00:26:46,080 Speaker 3: without a great CEO. 601 00:26:46,200 --> 00:26:47,560 Speaker 4: So that's critical appointment. 602 00:26:47,720 --> 00:26:49,879 Speaker 3: And there's also investor pressure as well, which is rightful, 603 00:26:50,000 --> 00:26:51,720 Speaker 3: you know, and you look at that for a period 604 00:26:51,760 --> 00:26:53,600 Speaker 3: of time and ultimately have you got confidence that they 605 00:26:53,600 --> 00:26:56,200 Speaker 3: are the right person or not? So boards ultimately have 606 00:26:56,240 --> 00:26:59,679 Speaker 3: to make that decision. And so we made that decision 607 00:26:59,680 --> 00:27:02,000 Speaker 3: and can actual with Richard. So we're into a search. 608 00:27:03,440 --> 00:27:05,800 Speaker 3: It's a kind of an interesting business because it's a 609 00:27:05,840 --> 00:27:09,159 Speaker 3: collection of lots of different businesses. You know, it's a 610 00:27:09,359 --> 00:27:14,080 Speaker 3: care business, it's a retirement business, and it's a property 611 00:27:14,119 --> 00:27:14,840 Speaker 3: development business. 612 00:27:14,920 --> 00:27:15,639 Speaker 2: Construction business. 613 00:27:15,720 --> 00:27:17,720 Speaker 4: Yeah, and on that side. 614 00:27:17,520 --> 00:27:19,560 Speaker 3: Well a bit more than I think it's development because 615 00:27:19,600 --> 00:27:21,359 Speaker 3: you think about you. 616 00:27:20,800 --> 00:27:22,440 Speaker 4: You're buying land, you're conceending. 617 00:27:22,720 --> 00:27:25,520 Speaker 3: It's not like you are a dominion constructor you are 618 00:27:25,840 --> 00:27:27,680 Speaker 3: you've kind of got the whole piece and you're selling 619 00:27:27,760 --> 00:27:30,479 Speaker 3: it down. So kind it's a developer in our language, 620 00:27:30,480 --> 00:27:32,760 Speaker 3: a key part is construction. But you're a developer, so 621 00:27:33,280 --> 00:27:35,879 Speaker 3: you look at that and say, well, which part of 622 00:27:35,920 --> 00:27:38,119 Speaker 3: that do you really need? So if you go and 623 00:27:38,160 --> 00:27:40,879 Speaker 3: get a developer, not in the many developers have running 624 00:27:40,880 --> 00:27:43,280 Speaker 3: business with seven a half thousand people, which is kind 625 00:27:43,320 --> 00:27:45,679 Speaker 3: of what we have. So are you a visible leader? 626 00:27:45,760 --> 00:27:48,840 Speaker 3: Can you inspire all those types of things? And on 627 00:27:48,880 --> 00:27:51,160 Speaker 3: the kere side, a lot of care is not for profit. Now, 628 00:27:51,600 --> 00:27:54,040 Speaker 3: you know, we have to be for profit so so 629 00:27:54,240 --> 00:27:57,520 Speaker 3: otherwise we can't be sustainable. So trying to find somebody 630 00:27:57,520 --> 00:28:01,280 Speaker 3: that looks like that and is deeply commercial it will 631 00:28:01,320 --> 00:28:03,840 Speaker 3: be our challenge. So but we'll look in Australasia for 632 00:28:03,920 --> 00:28:09,680 Speaker 3: that and we're hopeful it's got a strong purpose organization. 633 00:28:09,880 --> 00:28:12,159 Speaker 3: You know, you can be strong on the numbers, but 634 00:28:12,200 --> 00:28:15,200 Speaker 3: you also have to have empathy and alter. I think 635 00:28:15,200 --> 00:28:18,320 Speaker 3: we do good things, but to be sustainable, we have 636 00:28:18,359 --> 00:28:20,480 Speaker 3: to be financially sustainable. 637 00:28:20,760 --> 00:28:23,080 Speaker 1: If it came to it, would you stick around full 638 00:28:23,119 --> 00:28:24,680 Speaker 1: time in the executive role? 639 00:28:24,920 --> 00:28:24,960 Speaker 2: No? 640 00:28:25,119 --> 00:28:26,919 Speaker 3: A few people have kind of kindly asked would I 641 00:28:27,000 --> 00:28:28,840 Speaker 3: do that? But I think like I've done that, I've 642 00:28:28,840 --> 00:28:33,080 Speaker 3: done the CEO role. I enjoyed my move into governance. 643 00:28:33,400 --> 00:28:36,840 Speaker 3: I've got some great board roles and yeah, I look 644 00:28:36,880 --> 00:28:40,160 Speaker 3: forward to being cheer again, but never waste an opportunity. 645 00:28:40,200 --> 00:28:40,600 Speaker 4: Medicine. 646 00:28:41,080 --> 00:28:43,360 Speaker 3: We're leaning in and hopefully we will make it better 647 00:28:43,360 --> 00:28:46,520 Speaker 3: by the time the person arrives to what it is today. 648 00:28:46,680 --> 00:28:48,560 Speaker 1: And will that person have to agree to yours and 649 00:28:48,600 --> 00:28:50,480 Speaker 1: the board strategy and everything that you've put in place. 650 00:28:50,560 --> 00:28:52,240 Speaker 4: It's a couple of people raise it. Well, it's going 651 00:28:52,280 --> 00:28:53,680 Speaker 4: to be quite hard because you've kind of laid the 652 00:28:53,680 --> 00:28:54,160 Speaker 4: path here. 653 00:28:54,600 --> 00:28:57,760 Speaker 3: It's not like you bring in a CEO to correct strategy. 654 00:28:58,120 --> 00:28:59,720 Speaker 3: So I think that's something will have to work through. 655 00:29:00,080 --> 00:29:02,760 Speaker 3: The board sees the board quite clearly on this. We 656 00:29:02,840 --> 00:29:05,920 Speaker 3: think we know where the issues are and what needs 657 00:29:05,960 --> 00:29:09,560 Speaker 3: to change. If someone comes along and duturry investors are 658 00:29:09,600 --> 00:29:12,040 Speaker 3: also agree, we agree that's where the changes need to be. 659 00:29:12,120 --> 00:29:15,360 Speaker 3: If someone comes along and goes actually that's completely right, 660 00:29:15,440 --> 00:29:16,400 Speaker 3: that would surprise us. 661 00:29:17,360 --> 00:29:19,360 Speaker 4: Could they improve it? I fully hope so. 662 00:29:19,800 --> 00:29:21,719 Speaker 3: But I don't think it's going to be a pivot 663 00:29:22,240 --> 00:29:24,760 Speaker 3: away from those pieces because we know what's come undone 664 00:29:25,120 --> 00:29:27,680 Speaker 3: in the flywheel. It's a matter of going back and 665 00:29:27,720 --> 00:29:29,040 Speaker 3: getting those back working again. 666 00:29:29,320 --> 00:29:31,080 Speaker 1: Well, you have a very big job ahead of you, 667 00:29:31,160 --> 00:29:33,440 Speaker 1: and as your colleague on the board, James Miller would say, you've. 668 00:29:33,320 --> 00:29:34,280 Speaker 2: Got a lot of wood to chop. 669 00:29:34,400 --> 00:29:34,760 Speaker 4: He loves it. 670 00:29:35,160 --> 00:29:36,840 Speaker 2: He does love that saying, so I'll let you get 671 00:29:36,880 --> 00:29:38,520 Speaker 2: on with that, and I really do appreciate your time today. 672 00:29:38,560 --> 00:29:40,560 Speaker 3: Thank you nice Mitch madisone, thanks very long.