Notice that DMF only increased by $2m on revenues of $265m? If someone can work out why, that would be appreciated.
Printable View
Can I suggest if people want to refer to any numbers and have a discussion thereon, that they either cite where they got the number from, or show their calculation in how they derived it? I'd be happy to explain things where needed but I'm not going to unpick seemingly random numbers.
Balance - refer page 58 of the annual report. The topline number had me worried initially but per the breakdown of the DMF income there is $2.3m earned last year from leased sites that have since been sold. So a straight comparison of raw numbers is not a like for like comparison while OCA are divesting sites.
When you look at the number of holders with 1 - 1000 shares it seems inevitable that sharesies holders are aggregated as one holding, otherwise the 1 - 1000 figure would surely be much larger. As I understand it Sharesies members do not hold individually ( and do not get voting rights accordingly ) but via the custodian.
You do get to vote on sharesies now. They brought it in a few months ago I think. Ive always wondered how they split it being one owner? Maybe its a majority rules approach. Like if 70% vote yay for something then the full 100% sharesies custodian vote goes yay..?
I definitely get voting rights with sharesies but I was doubtful I’m 1 of only 468
Cash burn was $78m …if include dividend it was $85m
Mav ….this more than what you estimated in that cool chart you showed us a few months ago?
At least there has been no dividend paid since June 2023 and no dividend declared with these results. However that may be a reason why the share price is still in the doldrums. Some holders, who may have originally bought the share partly for its dividend yield, may now be capitulating, disappointed that dividends have not resumed.
Some takeaways for me:-
Employee retention rate (including clinical employees) was up 10%. May be just a sign of the times, but the Net promoter score was better as well and there is a share plan participation offered.
The total of care beds reduced to 1396 from 1651 at FY23. A further 91 will have gone since via the Takanini sale, 31 more (along with 21 Care Suites) via the Middlepark sale and more from the unidentified site presently under contract. Notwithstanding, it was interesting that MoH aged care subsidies paid was up $3.2m over FY23.
The insurance settlement re Gabriel and the Auckland Floods reached on 16 May removed uncertainty and allowed the 31 March figures in the Consolidated statement of Comprehensive Income and the Balance Sheet to reflect the actual sums agreed as receivables.In that regard insurance income recorded under Other Income was only $2.69m, compared with 12.02m in the prior year.
Interest on Senior Debt Facilities increased to $27.87m from the prior year $13.68m, a real drag on profitability. Bank Loan interest rates applicable were in the range 6.40% to 7.15% by comparison with the prior year 3.23% to 6.53%. Given the change in rates arose incrementally thru the year the interest charge for FY25 will certainly be even more even if drawn debt was unchanged. Bank Loans drawn as at 31 March were $418m.
Actual development and construction commitments disclosed as at 31 March 2024 were $45.3m. This is significantly lower than the prior year figure of $124.8m suggesting a slow down in the pace of ongoing activity or an unusually high level of practical completions in FY24.
Shareholders were thrown a small bone with the indication that an interim dividend for FY25 might be declared in October. This will not do much to move the dial so we seem to be in a holding pattern just now and perhaps for some time to come. Sub 60c will continue in my view.
I don't have real doubt that in the longer run the switch out of care beds and into more premium accommodation and care suites is the best strategy for OCA but it takes time and incurs costs.
Hey Ron …good list of achievements
But you didn’t include the 79% of construction waste was diverted from land fill …some 842t of it
You've all been waiting for it...so...
### Critical Review of the Oceania Annual Report 2024
#### Executive Summary
The Oceania Annual Report 2024 presents a comprehensive overview of the company's performance, strategic initiatives, and future outlook. The report emphasizes Oceania's commitment to innovation, sustainability, and providing a premium resident-focused experience in the retirement and aged care sector. Key sections include financial performance, integrated reporting, sustainability framework, resident experience, and growth strategy.
#### Strengths
1. **Financial Performance**:
- The company has shown robust financial growth with significant increases in total comprehensive income and net profit after tax.
- Consistent improvement in sales volumes and cash flow indicates strong market demand and efficient operations.
2. **Innovation and Resident Experience**:
- Oceania has introduced several innovative initiatives like the Nurse Practitioner Model and the Together App to enhance resident care and engagement.
- The Helier, a flagship premium care facility, showcases Oceania's ability to provide luxurious and high-quality care services, setting a new standard in the industry.
3. **Sustainability**:
- The company’s commitment to sustainability is evident through its initiatives like the Sustainability Linked Loan, Greenstar Communities project, and waste management practices.
- Oceania's alignment with the Integrated Reporting Framework and Global Reporting Initiative (GRI) reflects its dedication to transparency and long-term value creation.
4. **Strategic Growth**:
- The report outlines a clear and strategic approach to growth, focusing on both greenfield and brownfield developments.
- The divestment of non-core assets and reinvestment in high-potential projects demonstrate prudent capital management.
5. **Governance and Risk Management**:
- The report highlights a proactive approach to governance and risk management, including addressing emerging risks like climate change and cyber threats.
- Regular engagement with residents and incorporation of their feedback into continuous improvement processes show a resident-centered approach.
#### Weaknesses
1. **Dividend Policy**:
- The decision to not pay a final dividend might disappoint some investors who expect regular returns. While this is justified by the need for reinvestment, it could affect investor sentiment.
2. **Regulatory Environment**:
- The report acknowledges the ongoing review of the Retirement Villages Act and potential regulatory changes. However, it lacks detailed contingency plans or strategies to address potential regulatory impacts.
3. **Operational Challenges**:
- The report mentions the pressures on residents, teams, and the portfolio but does not provide in-depth analysis or solutions to these challenges.
- The GP shortage and its potential impact on resident care is recognized, but the mitigation strategies (e.g., Nurse Practitioner Model) might not fully address the scale of the problem.
#### Opportunities
1. **Expansion of Private Care**:
- The successful launch of The Helier indicates a market for premium private care. Expanding this model to other locations could capture a high-value segment of the market.
2. **Sustainability Leadership**:
- Oceania's sustainability initiatives position it as a leader in environmentally responsible aged care. Further development in this area could enhance brand reputation and attract environmentally conscious consumers and investors.
3. **Technology Integration**:
- Continued innovation in technology, such as the Together App and Alexa integration, could significantly enhance resident satisfaction and operational efficiency.
4. **Community Engagement**:
- Strengthening community engagement and partnerships could create additional value for residents and enhance Oceania’s reputation as a community-focused organization.
#### Threats
1. **Market Competition**:
- The aged care and retirement living sector is highly competitive. Maintaining a competitive edge through continuous innovation and high-quality service delivery is crucial.
2. **Economic Downturn**:
- Economic challenges or downturns could impact the financial stability of residents and their ability to afford premium services, affecting Oceania's revenue.
3. **Regulatory Changes**:
- Potential changes in the Retirement Villages Act could impose new requirements and increase operational costs. Proactive engagement with regulators and adaptation strategies are essential.
4. **Workforce Challenges**:
- Ongoing workforce shortages, particularly in nursing and general practitioners, could impact the quality of care and operational efficiency.
#### Conclusion
The Oceania Annual Report 2024 demonstrates a company committed to growth, innovation, and sustainability. While there are areas for improvement, particularly in addressing regulatory and operational challenges, Oceania's strategic initiatives and financial performance indicate a positive trajectory. The company's focus on premium resident experiences, technological innovation, and sustainable practices positions it well for future success.
---
**Recommendations**:
1. Enhance transparency around regulatory contingency plans.
2. Develop more detailed strategies to mitigate operational challenges.
3. Explore further opportunities for expanding premium care services.
4. Continue to invest in technology and sustainability to maintain competitive advantage.
According to sailor moon....year 2400
OCA near top of NZX leader board today
That's pretty good going to 6
Operator Your first question comes from Bianca Fledderus with UBS.
Bianca Fledderus
So first question from me is just around your new unit sale prices on Slide 12. Overall, that's looking good, but apartment new sale prices fell. And I know you mentioned that depends on geography and products. But I was a bit surprised by that -- given that's what The Helier will be included in, so would you be able to talk about what's driving that decline?
Brent Pattison
Yes. Good question, Bianca. I think for us, it was really just the mix. So if we think about The Helier, the influence in that FY '24 year has only been 13 IOU and 4 care products. So as a consequence, we haven't yet seen the material uptick that's going to occur in the apartment side. We've been selling through, obviously, some of our Awatere product in Hamilton, which has the least [ in value ] BayView, Eden, the last of Eden, Bellevue, et cetera.
So most of it is actually just mix rather than anything that we see untoward in our actual apartment levels. Looking ahead, we obviously see stabilizing pricing in the market. We haven't been a price takeout. We've been a price setter and we're expecting levels to be up around that, if not well in excess of that as we sell through some of those premium products.
Bianca Fledderus
Okay. And then just following up on The Helier. So you mentioned 25% of apartments are sold or under application and 20% of care suites. Could you share what percentage are actually sold?
Brent Pattison
So we have 13 that have been -- 13 IOU that have been recognized in April '24. And we have 4 care residents. We have 7 under application, where we've seen settlements in May -- April and May of IOU and 2 additional applications for care residence.
Bianca Fledderus
Okay. Okay. And then -- yes. Okay. So you mentioned the residential property market is still challenging and impacting sales at that village. And so with these more recent ones, I guess, did you have to lower prices at that village or offer any sort of increased incentives?
Brent Pattison
We haven't lowered prices, no. And I know that's a question that's been on people's minds. It's actually been more of just about confidence. People love the product. Lots of people are sitting there waiting for a stabilization in market. It's less about their expectations of what they're going to get from their homes, because a lot of the homes are obviously in the $5 million, $6 million, $7 million range that they are selling.
They just want confidence that if they market and go through that change, that there's going to be a willing buyer on the other end. So it's actually been less about market prices and more actually about an incoming buyer. Are they going to be able to finance it. Are they going to be able to afford that financing at higher interest rates.
As Adrian moves us to hopefully lower interest rates towards the end of this year or early next year, then I just think that it will help with sentiment. So people love the product. People are happy with the price. People are happy with the services, but they need to see some confidence. And as people know, there's an abundance of listing. So eventually, the market will clear that abundance of listings.
Bianca Fledderus
Yes. Okay. But -- so based on that, it sounds like first half of '25 may still be quite weak on sales for The Helier and then hopefully, we'll see an improvement in sort of second half of '25 for that village?
Brent Pattison
Yes. I think we're not necessarily seeing it the same as that, but I think we're just being cautious. And we know that it's something that people are focused. That's a flagship property for us, so we're been cautious. But what we have done is run various scenarios. And under each of those scenarios, we're confident that we will be cash positive with the sales that we'll make out to FY '25. So we would have recovered our investment effectively.
Bianca Fledderus
Yes. Okay. And then also there was a decent uplift in payments to suppliers and employees. And I remember you mentioned that The Helier would have high OpEx from day one. Could you talk about what drove the uplift? And how much of that is driven by the opening of The Helier?
Kathryn Waugh
Bianca, it's Kathryn here. I haven't got specific numbers for the call. But yes, as you mentioned, a few of our sites, because of the timing of openings, will be running at slight operating loss for the few months and The Helier, being one and also some of the other developments Brent had spoken to. That's natural in the cycle of it.
And because of the level of service that we provide and the experience that we want for residents, we've always had the motto that the operating model will be there 100% on day 1, even if there's only 1 resident and that will decrease over time. The other thing you will have seen is in our Village segment, there's an intentional additional investment in marketing spend, in particular.
We've been putting some more money to brand awareness. And you guys, if you got on early for the call, we'll have seen our recent TVC campaign, so -- and we're really proud of what that's done and the insights it's bringing to future residents and there's intentional spend from that.
Bianca Fledderus
Okay. And will that continue into FY '25? The marketing spend and all of that?
Brent Pattison
Yes. So what happens, the latest advertisement, Father and Son, as part of a series of properties that we had. So the first property was our residents telling their stories. The second property was around a couple playing piano in our care suites. The third property was around some residents moving into our apartments and taking their treasured dining room table. And the last has really been this notion around the care and the quality of care that we provide. So as a person's needs change, we are there. And I'm sure you love the theme song around sort of, "lean on me," and that's part of what we're trying to get to.
That is the last of a major spend. We've seen significant increase in familiarity, brand awareness, and we're excited with the properties that we've developed. So that marketing will taper. Where that marketing gets directed, Bianca, is into our inquiry levels, into our research and resident insights to drive -- it's more demand driven around improving our sales cadence and performance.
Bianca Fledderus
Okay. Great. And then last question for me. So you disposed of some assets in FY '24, so more in the first half of '25. Is that, essentially, the completion of your disposal program? Or are there any other assets you are considering selling.
Kathryn Waugh
No. There are some more left there, Bianca. In our financial statements. We have a disclosure as to the quantum of those. So yes, there are still a handful, but we'd hope to have those underway by the end of 30 September. So at the interim, you'll hear more from us on those.
Operator
Your next question comes from Arie Dekker with Jarden.
Arie Dekker
Just starting on the development pipeline. So you give a clear steer to nearing completion for most of it in '25. Outside of Meadowbank and Franklin, where you're sort of commencing works. Are you going to commence anything else into FY '25. And can you just talk about what we should be sort of expecting based on that for delivery into FY '26, because it's looking a bit done if you don't.
Heath Milne
Yes. Well, it's interesting, Arie, because as we build, our debt goes up, so we get hammered for that. But also, we're in a situation where we need to obviously sort of temper that pipeline. So if we think about into FY '26, we're moving into these broad acre developments, and they allow for staging, they allow for acceleration of capital if necessary.
Two obvious developments in [ Nam?ra ], which is in Franklin and Auckland, but also the acquisition that we did some time back, Bream Bay, which is in Ruak?k?, which allowed us to access a large side across the road as part of that transaction. Coupled with that, we'll be continuing, we said earlier, future site developments at BayView future development sites. We are at Lady Allum, et cetera.
So part of that is the job of the new CEO, I guess, but part of it is also the existing team, having a very strong view on the right product, right place, and where we are in the cycle. We've had a very, very intensive investment period around apartments and care suites. We're coming out of care suites. We're coming out of apartments. We're going into other product typologies. You can even see, with the deliveries that we have in forecasting for next year, [ roads are on them ]. We're starting to get to sort of almost the final stages of those buildings.
There's plenty for us to pivot towards, Arie, and it's really a matter of in that Golden Triangle where we can see good support for the end product. We're obviously going to go hard, but that will also be part of Andrew and the team and the new CEO thinking about where do we want to spend that next dollar in 2026.
And whilst we haven't, over this financial year, started maybe the same amount of development that we have in previous financial years, Andrew's team has remained very active in advancing design processes for our other care sites. Allum, where there's further -- there's further stage of development there, Lady Allum and Bream Bay as Brent mentioned as well.
Arie Dekker
I understand what you're looking to manage. So yes, the commitments that sit on the balance sheet at the end of financial year of $45 million, that pretty much is associated with those completions and finishing at Meadowbank in terms of further density. You're not looking to open anything up at this stage in FY '25?
Brent Pattison
Yes. No, and I think that's a good question. And hopefully, that's what we're providing assurance around. So you're exactly right, Arie. That's what it is. You can see in the graphics, scaffoldings are coming down, cranes are being removed, roofs are going on. In some instances, if we think about Elmwood, we're nearly ready to open the building. So a lot of the future debt, if you like, or development debt is already in-train or being spent or has been spent, I guess, to bring that new product to market.
Arie Dekker
That's helpful. And then final question just on this vein of questioning. So the reason you haven't looked to increase your facilities is pretty deliberate. You're essentially -- you're not worried about the risk of settlement timing in this market because actually, you're not looking to commit to a lot of new development. And so you'll sort of finish off what you committed to. It's not much and the settlement proceeds sort of come in. And for that reason, you haven't looked to increase your facility around that.
Brent Pattison
Yes. Sorry, you go ahead, Kathryn.
Kathryn Waugh
Yes. Brent can add to this. But, essentially, yes, Arie. I mean, we're sitting at $100 million of headroom today. That's plenty for what we need with the developments that we've got planned for the next 12 to 18 months. It's obviously something that we look at regularly. If the time comes in the future, then we will look at it. I talked about our key refinance date is out to '28, but obviously, we'll address it before we get to that point.
Brent Pattison
Yes. I think the other thing that we're mindful of, Arie, it's not a great time to be negotiating with banks' a favorable kind of financing facility at these sort of rates. So one of the hallmarks of Oceania has been to sort of peck windows, I guess, that bring our weighted average cost of capital down, bring diversity and tenure into our facilities, whether that's through bonds, whether that's through a refinancing event that Kathryn and I worked through, just trying to assist with that.
But there's plenty of headroom. And this is a deleveraging story for us. We've got some fantastic product that we have in market with a recovering housing market sentiment, albeit it keeps getting kicked down the road. But we do see a recovering housing market into '25, and we'll be focused on doing what we've done over the last 6 months, getting through that sort of unsold stock and delevering the balance sheet.
Arie Dekker
Great. And then just 2 quick final ones, hopefully. Just on the receivables, that balance of ORA receivables is climbing. The vast majority of it, you expect to realize within 12 months. Kathryn, could you just remind us what the approach is there in terms of what drives that growth and the short-term part of that ORA receivable to $74 million now? And then also what's driving the increase of the greater than 12 months from $10 million last year to $20 million this year.
Kathryn Waugh
Yes. Thanks, Arie. So yes, you're right. The short-term receivable is ticking up at $74 million at March. What I would say is, though, and we obviously analyze this every month, the portion of that, there's a high portion that's with under 3 months. And as we bring more and more care suites to market, we are naturally going to see that number increase, care suites and needs-based product.
It's one where we generally offer a 60-day deferral on entry because the person needs to be in that day or that week. And they're generally not having to sell the family home to pay that, but it's just a matter of getting the paperwork in order. So it's a low-risk thing for us on the care suites. Occasionally, we'll allow a portion of an IOU to defer a small amount for a short term as well. And so it generally, we'll build but not age, if that makes sense.
On the longer-term stuff, again, occasionally, sometimes we offer a 10% deferral or what you'll find is some of those have just only marginally ticked into the 12-month period. They're not delayed forever or not delayed till settlement, but they are more than 12 months. So we can't classify them a short term.
Arie Dekker
Sure. And then a final one for you, Brent, and, like, I appreciate it's not something you'd be there to execute on, but you guys have had some success in getting close to book or around booked for the divestments, albeit pretty small assets. Can you just sort of comment on whether the Board has considered divesting assets of larger size given the large value gap that's there and that being a potential means of sort of looking to close it?
Brent Pattison
Yes, I think that's a good question, Arie. I mean, it's frustrating when we think about the value gap, and part of that might have been sort of coming out of an index and not having a marginal buyer for the stock at that time. But I'm talking about the shares, obviously.
But from my perspective, we're in a situation where we look at the capital allocation of our sites. We looked at the portfolio transformation. So where do we want to be. Where do we know that there are good buying signals for residents. How do we create fantastic communities for people. And how do we make sure that these have embedded value that goes on, so how do we get that annuity.
So Kathryn, myself and the team went through, and we looked at sort of what's the trade-off between operating earnings. What's the trade-off around maintenance capital. What's the trade-off around competitive environment. What are our capital allocation rules and hurdle rates that we've got ahead. That's how we came up with our initial kind of divestment portfolio.
But we also know that we've got some crown jewels. So what do we think about those. Are we the best and highest owner of those and a deleveraging of the balance sheet. At this stage, we've taken a pretty prudent approach. We have tried to demonstrate to the market that we have kept our operating earnings kind of roughly in line and being able to recycle cash. And that's been our primary focus, first and foremost.
It will be for somebody else to consider. But I think we're pretty happy where the portfolio's at. I touched on it earlier, Arie. [ It's ] one of our total sites that represent about 85% of the $3 billion. So we think we've got the sort of portfolio that we want to keep. And we think that we're going to start to see some pretty attractive annuity DMA coming off there. Our occupancy is lifting, resident satisfaction's lifting. So that's a challenging one.
We're also talking about a market where the types of sites that we have divested, there's -- and we've spoken to before, a theme in the service offering of those sites, largely care-focused. And there's a reason why, for the market that's out there, that's desirable. When you start going into the other end of our portfolio, it doesn't have the same features that, obviously, that market would look for. So it would be a completely different proposition.
Operator
Your next question comes from Aaron Ibbotson with Forsyth Barr.
Aaron Ibbotson
Brent, good luck with your future plans and thanks for good, robust discussions. I got a couple of questions. I guess my first question is on what I would call core debt, I'm not sure what you would call it, but basically, the difference between what you highlight as development assets and net debt.
So a year ago, you had $600 million of development assets and $550 million, call it, of net debt. Now you still got $612 million over development assets, but $630 million of net debt, call it. So there's a quite material increase and particularly, in the second half, there was a big jump.
So I'm just trying to understand your view of this and how you expect this core debt to develop as you potentially, depending on what the market does, sell down some of your inventory. Is this quarter that's going to continue to sort of creep up, this difference between these 2 numbers?
Kathryn Waugh
Yes. Thanks, Aaron. It's Kathryn here. It's a good question. I mean, a couple of years ago, 3, 4 years ago, core debt, we'd really only use it as a kind of month-on-month working capital to have a buffer and occasionally, from time to time, we'd use it for dividends. If you remember when we did the project to purchase Remuera Rise and Bream Bay, we used our core debt facility at that time, which is why it's ended up at a higher, more stable level.
And we have also been using it recently to buy small parcels of land. So you will have seen our disclosures and we've been buying a few of the pieces of land at the back of The Helier. So I guess that explains why it's where it is at the moment. To your question about how do you see it...
Aaron Ibbotson
I'm sorry. Kathryn?
Kathryn Waugh
Yes?
Aaron Ibbotson
Buying land should not increase it, because presumably, you pay and then you put that land in unsold, undeveloped plan, no? So I'm looking at Slide 14 here, and I'm comparing the $612 million with your net debt number. So if you buy land for $20 million, that $612 million goes up by $20 million and your net debt goes up by $20 million. So that gap does not open up because of land acquisitions.
Kathryn Waugh
No, I understand, I understand. I was just touching on the drawn amount to start with. So -- but kind of -- sorry, rounding out what I was saying. So the drawn amount, kind of that's where we've got to the level it is. If I answer your question first about how we see it going forward and what's going to happen with that core debt, we touched on, a few times, myself and Brent, about how, as we sell down developments, that cash obviously goes against the development facility in the first instance.
Going forward, once we're at a cash-neutral position, which we're expecting we will be by the end of this next financial year with The Helier, we can use those funds to be kind of allocated against our corporate facility. So that will see us bringing that number right down and having more of a headroom in our working capital. And you'll note this morning, you also touched on how we can move between the 2 facilities, so between our corporate and our development. And so that's kind of the roadmap for where it's going. And yes, I don't know if Brent wants to add anything about the…
Aaron Ibbotson
Sorry Kathryn, I'm not asking -- sorry, Kathryn, I don't really mind which facility you put it in and how much you draw. I'm looking at the total overall amount, yes? So you reported net debt of roughly $630 million and development assets of $612 million. That's a negative $20 million.
At the half year, you reported $634 million of development assets and roughly $607 million of net debt. That was a $25 million positive. So your -- the way I would think about core debt has gone up by $45 million over the last 6 months. We don't have to call it core debt. We can just call it the difference between these 2 numbers.
It's gone up by $45 million in the second half, so effectively, what I'm saying is your development assets seem to have gone down a lot more than I would have expected given what your sales proceeds are and how much CapEx you're spending. So I'm just trying to understand maybe these are the ORA receivables or something. But I'm just trying to understand why the difference between these 2 numbers have gone up by $45 million in the second half since the first half.
Kathryn Waugh
Yes. Okay, I understand.
Brent Pattison
So some it, Aaron, might be buybacks. So that's probably a consideration.
Aaron Ibbotson
That was positive in the second half according to disclosures.
Brent Pattison
Yes. So I'm just trying to think about what is driving that difference that you've just given us. So let us answer it, call you off-line so that we've got time to just work through that. We don't have the materials in front of us. But if I think about what's happening with the development assets, some of it's going to be valuation. Some of that's going to be buybacks and how we've used the facilities, effectively, in our switching.
Aaron Ibbotson
So your unsold new stock, has it been valued down in the half?
Brent Pattison
Not on mass scale, but yes, the other point that I'd add to these numbers is these come from CBRE valuation. So they are subject to movements in things like in-going prices, even other little changes, like parts of sites being changed, I guess, the treatment of how they're valued. We've had parts of sites that have been moved from being treated as development land, actually, back to going concern, so it comes out of some of the buckets in here, if you can really dig down to that level of detail.
The other one on which you point -- which you referenced as well, Aaron, is we refer to, on this analysis, for -- I guess, for conservatism, we refer to unsold stock per our CBRE evaluations, which doesn't account for deferred settlements or, yes, for sites that are -- there's a bunch of The Helier sales, which are not included in our unsold new stock, which settled after balance [ debt ], for example. So that receivable is the other side of it.
Aaron Ibbotson
Yes. It's just a bit unnerving when these numbers move unexpectedly by such large amounts. But anyway, second question for me. Just -- you touched on CapEx and $100 million being comfortably enough to finish off, I'm not sure if that's a net or a gross number, but I think it would be really helpful for me and maybe for others, if you could go through what CapEx you've got remaining on sort of the 3 or 4 projects you're finishing this year, so Elmwood, Waterford and Awatere.
How much -- I mean, if I look at the pictures, it looks like it's not that much left, but I remember thinking that for The Helier and there was quite a lot left. So I'm just curious to understand, is this, what, $20 million a village or less? What are we looking here, approximately, to finish these 4 listed projects this year? I appreciate there's other CapEx as well.
Kathryn Waugh
Yes, yes. No, you're right. So I think the easiest way of probably looking at it as if I look back to the question that Arie asked, which was around the -- in our stat account where we talk about what are we committed to. So we committed to another $45 million in the next 12 months.
That covers those kind of the top half of the slide that Brent had of the pictures that are underway. That doesn't include the cost of Franklin. We are out for tender on that at the moment. So it includes what we need to finish, the earthworks, but not the development as such.
So I view it as a $45 million for Elmwood, Waterford and Awatere and Meadowbank. And then Franklin, as we said, we're the controllers of that destiny of when we start. When we do start, Stage 1 will be a handful of villas. We're also going to start the development of the community center and the care facility at that time.
Aaron Ibbotson
That's super helpful, Kathryn. But just to spell it out, though, I guess Arie and I are asking the same questions in different ways. But looking at this then and looking at your sort of wait-and-see approach to a few of the new developments, which personally makes sense to me. It looks like CapEx can fall pretty dramatically this year, and then again, next. Is that fair, assuming no other dramatic developments?
Brent Pattison
Well, we can't -- we don't have a crystal ball, Aaron, on where the market goes. But I think in essence, yes. I mean that's all part of this transformation of the portfolio. We grew the portfolio from $900 million to $3 billion. And now we're going through a tapering. We had COVID and other activities that kind of meant that we were truncated with all of our developments coming on stream at the same time. Helpfully or unhelpfully, all of those developments, as you are aware, were large-scale capital intensive apartments and/or care buildings.
So I think what Kathryn and the team are referring to is there's some flexibility, I guess, in terms of how and when and in what proportions we allocate our capital going forward. We're not going to be stuck in the ground for 3 or 4 years with delivery of 190 apartments or 160 care suites or things of that nature. So that's a long answer to a short -- to your question. But yes, capital can moderate from here.
Heath Milne
And the nuance is that this time, 18 months, 24 months ago, we had twice as much under construction as we do at the moment, committed. And this time last year, I had I think 409 units. So whether we made new decisions or not, we were committed to those projects. Whereas now, we don't -- we're not giving guidance as to what those CapEx numbers are going to be. We have more control over whether we accelerate or delay further development.
Operator
The next question comes from Stephen Ridgewell with Craigs IP.
Stephen Ridgewell
Just first, first of all, good to see the pivot and I see your development strategy to more broad acre and general tapering of development activity in the next couple of years. Just first one for Kathryn, just for the divestments that you've announced and looking to settle, what is the expected EBITDA impact from those divestments, please?
Kathryn Waugh
For the future ones, yes, good question. I might have to come back to you on that one. The ones that were sold today, it's only about $100,000 impact. Going forward, it will be between $1 million and $1.5 million. So for FY '25, it should be between $1 million and $1.5 million.
Stephen Ridgewell
Okay. That's helpful. And then I guess just on the improvement in aged care EBITDA we saw in the second half. I mean, it was good to see following the DHB funding increase. I guess just interested, do you see that run rate in the second half is kind of a good base level as we enter currently FY '25 year? That $12 million per half, is that a sustainable run rate? Were there other kind of cost pressures that we should be mindful of that perhaps sort of dials back a little bit from where it's been. And then can you -- also just interested in occupancy rate towards the end of the period.
Brent Pattison
I think those are good question, Stephen. We're actually really pleased with the direction of travel in the care business. It's been hard yards. We overinvested during COVID, as you know. We're starting to unwind that. I made a comment a couple of years ago that we've become full-time recruiters rather than running a business as we think about the unavailability of sort of clinical staff in particular.
So what we're seeing is a very pleasing improvement in our wage-to-revenue ratios we're seeing a really positive improvement in our occupancy, and some of our sites are setting up around 100%. And as we're selling through our care suites and some of our new developments, we're seeing EBITDA margins improving. We're seeing bed -- if we want to use non-GAAP measures, our EBITDA per bed materially improving. And that's before we get the windfall of some of this new innovation around private pain care and other forms of premiumization that's occurring in the portfolio.
If the government are of a mood to improve our funding, the net material improvement in our performance. And because we have the right sort of platform in place now, then hopefully, what happens is that it's true margin improvement for us rather than pass through.
So I think from where we're sitting, we are actually seeing, for the first time in a long time, a real improvement, cost coming down, stabilization of workforce, medical cost inputs are coming down, occupancies going up in premiumization, i.e., the share of the wallet from our residents is improving our overall kind of financial outcomes.
Stephen Ridgewell
Got it. That's helpful. And then maybe if I just go back to the -- I'd ask another question on -- I guess, if we go back to the interim results, I've probably asked this question at the time about sort of direction of travel. And I think the comments that we noted at the time was an expectation for management debt, that it would be kind of steady or perhaps down a bit, depending on, obviously, sort of activity at The Helier and a few other things.
We've seen net debt sort of pick up about $26 million half-on-half. I'm just interested compared to the internal projections that you had 6 months ago. What was kind of the key line item that was a little bit worse than expected? Was it mainly slower settlement at The Helier and some other sites? Like, just a little bit more color would be helpful, please.
Kathryn Waugh
Yes. Thanks, Stephen. I think probably the key thing is a few of those divestments we thought might have settled in March. So you will have seen we've had another $16 million of sales proceeds in April and May. We've got another site that's under contract at the moment. Had they fallen into 31 March, then we would be a lot steadier.
As you say, there's a $26 million left, $16 million of that is funds that we've received post the balance date. There's also a little bit of reinsurance funds that we would have hoped to have had by now, but that's kind of trickling through in May and June as well.
Brent Pattison
Yes. But also, I think if we address the -- we probably expect it to be a little bit further along in the sell down of The Helier. We did -- the team have done an outstanding job, Stephen, as it relates to sales, $476 million. That's the best performance we've actually had. All of the markers, from my perspective, were up. But those were very, very material kind of outcomes for us.
So as Kathryn said, $10 million in divestments and $16 million in other elements and then maybe 2, 3, 4 more sales at The Helier, we'd be back down to sort of our debt starting with a 5 rather than starting with a 6. And so that's probably giving us some of the confidence that you're hearing on the call around this kind of deleveraging and what's actually happening in the business.
Stephen Ridgewell
That's helpful. And just one last question from me again, sort of -- but maybe putting the front book to one side, and maybe just looking at the cash generation from the existing assets, which is something we do track pretty closely, and you have good disclosure as a company that we can actually work it out.
We can actually work it out for a lot of [ operators ], so we thank you for that. But I guess if you sort of look at the kind of operating cash flows and your backed out deal interest to allocate it to development, back out the new sales receipts and then subtract the maintenance CapEx that the company, on numbers, kind of burst out $27 million in FY '24.
And I guess I'm just interested, how much of that is start-up losses on new villages? Obviously, there's been a lot of new product that you've come out with in the last few years. And then, I guess, the pathway to really get into a positive cash generation or positive cash generation from existing or back book of assets. I think it would just be quite helpful how management kind of thinks about, perhaps, the time frame to achieve it as you start to kind of wind down the front yard, the development book in the next few years.
Kathryn Waugh
Yes. Thanks, Stephen. I'll start, and then I'll let Brent fill some of the gaps. So you're right about the operating losses. Where we've experienced that the most is on our care developments. And so as you know, we move over as many residents as we can to make them as efficient as they can from day 1.
But inevitably, until you've got a full building, there will be a little bit of a drag. And Elmwood comes online at the end of this year, so we'll have that impact in '25, but that is really the last of our brownfield care development. So we do expect that kind of drag that we've experienced over the last couple of years will disappear in the future. And I might let Brent talk to…
Brent Pattison
I think you've covered it wonderfully, Kathryn. I think all that's happened, Stephen, is that we've had this pivot out of care, so we're doing the last of that large-scale premium care and those assets are really -- you've got to operationalize them from day dot. And as a consequence, they come with a pretty heavy operating impact.
We're stopping that. We're moving away from that. We feel like we've got a pretty full portfolio now of where we want to be around care. And it goes to my sentiment around wage-to-revenues coming down. Occupancy is going up, but also the disruption that we've had in our numbers in past years.
We've decanted residents, undertaken an intensive developments around care. We're kind of at the end of that. So Elmwood is the last sort of major key suite delivery. And therefore, people will start to get confidence around 18,000, including DMF. We would be moving well into the 20s and possibly into the 30s over time. So that's probably what the strategic intent is. We've just got to deliver it to it.
Operator
Your next question comes from Nick Mar with Macquarie.
Nick Mar
Just on the new sales stock. I was just wondering if you can provide any color. You kind of mentioned, "I will start reporting it when we get to an appropriate level." Any color on where you think that should be for the business?
Kathryn Waugh
I think a nice rule of thumb will be when we're at a point where there's nothing over 12 months, really. And so it's kind of the general churn of what we're bringing to market each year. It's coming through. Yes, I don't have a magic number, Nick. I'll probably stop disclosing it when people stop asking about it.
Brent Pattison
I think the other thing that I'd say, Nick, is that we brought a lot to market. And what's helpful is that of the $350-odd million, there's $50 million that you can't sell anyway because you've got a resident that's already in occupation from previously being decanted. So you're down to $300 million.
Of that $300 million, $200 million of it is the last 12 months. And I think the desire is to get through it as quickly as we can. The $88 million that's left over, we're already -- we're starting to see really good kind of applications on that part of the portfolio. So the team are desiring to have, as Kathryn said, sort of stock sitting not least than 12 months old from a seasonality point of view. But we're starting to make the sort of traction that the market would expect us to be making on the inventories that we built up.
Nick Mar
No, that's great. And then I know there will be some sort of difference in views as the new CEO comes in, but sort of medium-term development out for this business, and I think $250 million to $300 million, as you've talked about before, where do you guys stand today?
Brent Pattison
I think we probably stand to the -- sort of to the lower of that booking. I don't think we're going to be rewarded for bringing 300 units to market tomorrow until we can demonstrate that we've got through the stock that we've got. So the desire by the business is always to be in sort of the lower bands of 30% to 35% from a gearing perspective.
That can change a lot by just having in -- your asset values being considered in a different way. But I think the reality is, Nick, that the market is probably tapering. The market is moving to product that you can see greater and faster recycling of cash. And it's at least, probably for us, in terms of the development of our pipeline, around 250, 300 units per year.
It's actually right product, right place and an ability to demonstrate presales and adoption of the product that we're delivering. I think as a consequence of that, we're probably something starting with a 2 rather than ambitiously starting with a 3.
Nick Mar
And on the back of that, where do you see that sort of $250 million of undeveloped land and WIP sitting? Where do you think that needs to sit as you transition to that sort of follow-up [ cadence ] of development?
Brent Pattison
So you mean in terms of land holding costs, meaning turns or how quickly we turn that soil? I wasn't -- I'm not entirely sure, Nick, what the line of questioning there.
Nick Mar
Sorry, the sort of $112 million of undeveloped land and $147 million of WIP at the moment. In aggregate, does that need to go up or down or sideways to deliver what you're talking about in terms of the medium-term target [ you're building ]?
Brent Pattison
Right. Yes, okay. I think for us, we've got enough in the consented pipeline, and we're in locations that we know we've got to have the right sort of residents at the end of it. But we've always been curious around -- and intentional around building optionality into the pipeline.
When we're in more favorable market conditions, we did some acquisitions. Andrew looks at property opportunities every day. There's availability of land banks. So I think as market conditions improve, it then allows us to just be a bit more expansionary as we think about key locations that we might not be in that we want to be in. But within the existing portfolio, then we've got plenty of time just to develop out what we have.
Operator
Next question comes from Shane Solly with Harbour Asset Management.
Shane Solly
I've got 2 quick questions. The first one, just picking up on the -- getting cash neutral at The Helier in FY '25, what was the sort of key stepping stones to get to cash neutral in FY '25?
Brent Pattison
Not too many more sales, to be honest, Shane. I think the reality is that this project is going to demonstrate some pretty compelling free cash flow above the original investment. It's also going to develop -- it's going to give a pretty outstanding development margin. We don't put a lot of weight on development margins, obviously. We focus on cash.
But I think from our perspective, if we think about the cadence that we're seeing if we think about the inquiry, elevated inquiry levels that we've got, we've got a lot of confidence that a bunch of sales ahead of us and get us there pretty quickly and leave plenty of cash for that sort of upside that the market has been expecting.
Shane Solly
Great. And just a second question then. In terms of your confidence to lift your build rate, and I appreciate what you've just kind of gotten to Nick, but, just, what would actually see you want to lift that build rate? What are the sort of preconditions that you need to see?
Brent Pattison
Well, I think it's about the confidence of the residents. So if it's a care product, we've got to basically see that there's still a willingness for share of wallet, i.e., government/resident paying combinations. If it's apartments and villas, then that's kind of right product, right place.
So we've got some fantastic sites that we would accelerate with just some better market conditions. An obvious one is Lady Allum. We've built a beautiful care building there. It's already fully occupied and great reputation and there are sites available for some apartment developments.
And those apartments would have outstanding views and be highly attractive to buyers and they're present, particularly as other participants, other competitors have pulled the -- hold the product in close proximity to ours. So the market is opening up for us to develop. We need confidence that residents are going to be able to sell through the houses or be able to sell through the share portfolios or other forms of assets to move into occupation with us.
Operator
Your next question is a follow-up question from Aaron Ibbotson.
Aaron Ibbotson
Apologies, but I just need to follow up on your sort of unsold new stock and the valuation of it, because it's -- if I look relative to the half year, you've delivered -- what did you deliver in the second half? 120 or something. And then you sold for $60 million or something like that. So you delivered 120 units and then you sold for $60 million. So I'm just trying to understand how this number went down by $69 million or whatever you said during the call.
Brent Pattison
Yes, I think…
Aaron Ibbotson
That's quite a big number.
Brent Pattison
Yes. So I think probably, given we are sort of 15 minutes over what we have allocated, Aaron. Certainly, Kathryn, I, Heath, we're here. We're happy to sort of answer that question, and we're happy to make it available for others, so can we take that off-line so that we can actually do the maths that you've just done to actually provide the right response?
Aaron Ibbotson
Absolutely. Thank you.
Operator
There are no further questions on the teleconference at this time. I'll now hand it back to Brent, Kathryn and Heath to answer any questions from the webcast.
Brent Pattison
There was just a question -- well, there are a couple of questions from the website, but I'm pretty confident that we've covered those and they're were actually just around visibility of sales, and, I think, we've been very transparent about that. There were some comments around these, and I think we've canvassed that to a degree. We'll certainly circle back on this last question that Aaron's raised.
I would say, in conclusion, this is my last time doing this for Oceania and it has been an absolute privilege for me to work with this team, and I love this job very much. And I think Oceania has delivered a fair result to the market. We've got plenty of cleaning ahead of us, and that's a great opportunity for the incoming CEO.
But I do want to thank everybody for their support of our business. We've certainly enjoyed the robustness of these discussions over the years. and we're really proud of what we've done. So thank you for people, making time available and engaging with us in the way that you do.
Kathryn Waugh
Thank you, everyone.
Thanks for Posting Sailor.
Heath Milne
Yes. Well, it's interesting, Arie, because as we build, our debt goes up, so we get hammered for that. But also, we're in a situation where we need to obviously sort of temper that pipeline. So if we think about into FY '26, we're moving into these broad acre developments, and they allow for staging, they allow for acceleration of capital if necessary.
God damn it, run the bloody company in the best interests of your owners like your fiduciary duty states.
Do not run it on their damn opinions.
Make sure you carefully consider the below when analysing cashflows. Very important.
Arie Dekker
Great. And then just 2 quick final ones, hopefully. Just on the receivables, that balance of ORA receivables is climbing. The vast majority of it, you expect to realize within 12 months. Kathryn, could you just remind us what the approach is there in terms of what drives that growth and the short-term part of that ORA receivable to $74 million now? And then also what's driving the increase of the greater than 12 months from $10 million last year to $20 million this year.
Kathryn Waugh
Yes. Thanks, Arie. So yes, you're right. The short-term receivable is ticking up at $74 million at March. What I would say is, though, and we obviously analyze this every month, the portion of that, there's a high portion that's with under 3 months. And as we bring more and more care suites to market, we are naturally going to see that number increase, care suites and needs-based product.
It's one where we generally offer a 60-day deferral on entry because the person needs to be in that day or that week. And they're generally not having to sell the family home to pay that, but it's just a matter of getting the paperwork in order. So it's a low-risk thing for us on the care suites. Occasionally, we'll allow a portion of an IOU to defer a small amount for a short term as well. And so it generally, we'll build but not age, if that makes sense.
On the longer-term stuff, again, occasionally, sometimes we offer a 10% deferral or what you'll find is some of those have just only marginally ticked into the 12-month period. They're not delayed forever or not delayed till settlement, but they are more than 12 months. So we can't classify them a short term.
Incredible earnings call;
Arie Dekker
Can you just sort of comment on whether the Board has considered divesting assets of larger size given the large value gap that's there and that being a potential means of sort of looking to close it?
Brent
Are you fing mad?
Brents actual answer must be studied in great detail by each and every one of you.
It's not just a function of the price, but also my understanding of the Business.
To go over much over 10% I would need to do an immense amount of work, which I intend to do. If I am comfortable with what I think I already know, then the potential is there to go to 20% plus. Who knows, maybe even 40%. This is how you get seriously rich. You have to know when to swing for the fences.
I am very confident this business is worth far in excess of NTA. If I keep just NTA value as a massive margin of safety to my actual estimated value and I am sure enough to go say 30% and the business gets valued by the market at NTA at some point and that NTA will be much higher too... Then that's some pretty serious stuff.
Berkshire, although I already owned a lot purchased pre $200, I knew enough to swing seriously at the fence at $260 despite being told I was an idiot by all share traders greatest fools. But I know Berkshire a lot better than OCA.
Umm, that's a cash flow statement old boy.
In the West we use something called Accrual accounting, best you study up on what that means.
Then figure out what 'operating' for this company actually means, what are its actual operations?
Then go through the income statement and carefully analyse the 'revaluations' and exactly how they come about. Is it just someone making it up with the stroke of a pen? Or is it something more substantial? And what exactly is it?
Lol ..if so true ...why big fundies are not loading up....
Big fundies bought high n sold low then retail investors are munching it....
Oh wait....thier analysts are not smart like U....lol
U r full of crap sailor moon...
Day Trader,
Why don't you look on page 55 where the operating segments are laid out in a proper income statement method for all to see?
Why are you disingenuously picking data from a cash flow statement that has little to do with what you are trying to show?
You could also look at page 59 where expenses are detailed.
https://www.sharetrader.co.nz/images...quote_icon.png Originally Posted by Daytr https://www.sharetrader.co.nz/images...post-right.png
Really who knew.
Cash in vs bigger amount of cash out.
Operating loss for what they charge residents in weekly fees etc vs what it costs to operate the villages.
Nice put down in the other thread by the way.
You really are getting desperate.
Morning Gents, Im trying to understand the debate/discussion you two are having, which i do enjoy reading but quite often goes way beyond my intellect level. Please correct me if im wrong but surely the cost to operate is above what they charge residents if the occupation levels are low ie newer development that has not had time to sell units to its full potential, but once occupation levels rise then this would become cash positive. So while there are a greater number of newer developements the operating costs will be higher than the residents contribution but this will likely change as more residents fill the halls, or am i over simplifying this?
You are exactly right,
In the earnings call I posted yesterday they highlighted how they have full staff and service for the 'hotel' even is there is only one guest.
The issue we are debating however goes beyond this.
He is just looking at the cashflow statement and looking at cash in vs cash out for the period and there are two seperate, three actually, issues with this.
1. A cash flow statement just follows cash over a certain period, so if they make a massive payment for serves over the next 10 years, that will look awful for this particular period, but for the next 9 years will look great. This is why we have income statements to smooth out the income/expenses to match the periods they are applicable.
2. The line item on the cash flow statement 'payments to suppliers and employees' is not detailed as to what these payments are for and what they are to go against in revenues.
3. The information he is trying to convey (operating expenses and revenues) is highlighted in great detail and appropriately timed just a few pages down as I have highlighted.
What he is doing is obfuscation.
But on top of all this, you are right in what you have observed as well.
My buddy Rob said Daytr “ What he is doing is obfuscation”
I’d say Oceania themselves are doing the obfuscating …and they are masters of it
Why do you keep stating the obvious, as if that's not a given. In my original post about this I stated it was excluding the related property development proceeds. So things like DMF, sales & resales are subsidizing the difference between the cost of running the villages and the amount of fees generated from residents.
I highlighted exactly what I wanted to highlight.
An ongoing & increased loss of the day to day running of villages. Yes new developments will impact this until they are sold but not to the tune of $40M.
Other retirement industry operators seem to operate at a day to day profit despite facing the same challenges of new development occupancy.
Anyway, beautiful Saturday here & I'm off to enjoy it.
So much squabbling 🫣🤭
Will we actually hear back about the ~45M gap Aaron asked about..
There seemed to be a lot of umming and aahing for a property development company.
the analyst aron asked good question around cashflow , management could not answer about discrepancies. they will get back to him privately
Also unless i misinterpreted Brent mentions that the incoming residents need to unload properties in the 5-7m range, is this for real?
Obfuscation is one word for what Brent & OCA were doing. Clueless could be another?
From the Q & A :
Aaron Ibbotson
Apologies, but I just need to follow up on your sort of unsold new stock and the valuation of it, because it's -- if I look relative to the half year, you've delivered -- what did you deliver in the second half? 120 or something. And then you sold for $60 million or something like that. So you delivered 120 units and then you sold for $60 million. So I'm just trying to understand how this number went down by $69 million or whatever you said during the call.
Brent Pattison
Yes, I think…
Aaron Ibbotson
That's quite a big number.
Brent Pattison
Yes. So I think probably, given we are sort of 15 minutes over what we have allocated, Aaron. Certainly, Kathryn, I, Heath, we're here. We're happy to sort of answer that question, and we're happy to make it available for others, so can we take that off-line so that we can actually do the maths that you've just done to actually provide the right response?
Aaron Ibbotson
Absolutely. Thank you.
Operator
There are no further questions on the teleconference at this time. I'll now hand it back to Brent, Kathryn and Heath to answer any questions from the webcast.
Brent Pattison
There was just a question -- well, there are a couple of questions from the website, but I'm pretty confident that we've covered those and they're were actually just around visibility of sales, and, I think, we've been very transparent about that. There were some comments around these, and I think we've canvassed that to a degree. We'll certainly circle back on this last question that Aaron's raised.
I would say, in conclusion, this is my last time doing this for Oceania and it has been an absolute privilege for me to work with this team, and I love this job very much. And I think Oceania has delivered a fair result to the market. We've got plenty of cleaning ahead of us, and that's a great opportunity for the incoming CEO.
But I do want to thank everybody for their support of our business. We've certainly enjoyed the robustness of these discussions over the years. and we're really proud of what we've done. So thank you for people, making time available and engaging with us in the way that you do.
A fair dallop of borrowings in latest report
Also a fairly large dallop of pie in the sky values up - is where the illusive deep value is hiding
if it can be pinned down ? ;)
seems to me that the poor unfortunates who happen to fall into a few of these shares might be waiting a very very long time to see any of it ;)
From Annual Report Total Comprehensive Income by segment -
Care. $18.6m
Villages $73.1m
Other $21.2m LOSS
Other is admin and support costs …probably HQ
So there we have it - Care and Villages are profitable …profitable enough to subsidise the fat cats in HQ
... deleted, need more thought.
Brent Pattison's responses in the investor call exhibit signs of evasiveness, particularly in how he addresses specific questions with broad, non-committal answers and deflects to general market conditions or future expectations. Here's a detailed assessment:
1. **Apartment Sale Prices (Slide 12):**
- **Evasiveness:** Brent attributes the decline in apartment sale prices to a "mix" issue, referencing the influence of The Helier's sales and other products without providing concrete details on why this mix specifically caused the decline.
- **Lack of Specificity:** He mentions selling through products in Hamilton and other locations but does not detail how these impacted the overall price.
2. **Sales and Applications for The Helier:**
- **Evasiveness:** When asked about the percentage of apartments sold, Brent provides numbers but mixes them with under-application figures, potentially causing confusion about the actual sold units.
- **Clarity Issues:** His explanation includes different statuses (sold, under application) without clearly differentiating them.
3. **Impact of the Residential Property Market:**
- **Evasiveness:** Brent deflects from discussing any direct price reductions or incentives by focusing on market confidence and the broader economic environment.
- **Ambiguity:** His explanation is more about the overall sentiment rather than addressing whether specific measures like price reductions were taken.
4. **Marketing Spend:**
- **Evasiveness:** Kathryn, responding for Brent, doesn't provide specific numbers for future marketing spend but talks broadly about the impact and direction of marketing efforts.
- **Generalization:** The response is vague about future expenditure, indicating a continuation without clear financial specifics.
5. **Development Pipeline:**
- **Evasiveness:** Brent discusses the broader strategy and market conditions affecting development decisions without committing to specific projects or numbers.
- **Avoidance:** He emphasizes the flexibility and scenario planning without detailing immediate or concrete actions.
6. **CapEx and Future Development:**
- **Evasiveness:** When asked about the specific CapEx remaining for ongoing projects, Kathryn provides a general figure and mentions the control over the timing of future expenditures.
- **Non-committal:** The response does not break down costs by project or provide a clear forecast.
7. **Debt and Facility Use:**
- **Evasiveness:** Brent and Kathryn discuss the use of facilities and headroom but avoid providing detailed explanations of the increased core debt and its future trajectory.
- **Deflection:** Brent mentions general strategic decisions and market conditions without addressing the specific financial adjustments.
8. **Divestment Impact on EBITDA:**
- **Evasiveness:** Kathryn's response indicates a need to revert with specific numbers, suggesting unpreparedness or avoidance of detailed impact disclosure.
- **Lack of Detail:** The response lacks immediate, precise figures, implying a degree of evasiveness.
In conclusion, Brent Pattison's responses often reflect a tendency to provide broad, non-specific answers, focusing on general market conditions and future expectations rather than addressing direct queries with precise data or commitments. This approach can be interpreted as evasive, potentially to avoid highlighting unfavorable details or uncertainties.
The quote is from 18 months ago when price was in low 70's - sad but panned out that way. As per my other posts around that time I wont be backing up the truck but may buy a few more as am working still (in the insurance industry, yes we have the Zespri claim, though I dont deal with such large stuff myself). Possibly also increase my diversification by getting some SUM
For OCA , technically the March - April rise was still corrective, ie not bullish , mid April - mid May downturn impulsive bearish. so we are still in a bear market with the new low on 14 May. That daily candle was a hammer though, so could be a bottom, but too soon to tell with only 8 days trading since then. Its nice to see RSI staying above 30 even during the down phase.
Attachment 15120
.
It's only profitable because the 'Total comprehensive income' is skewed by +$60.7m Village Operations "change in fair value of investment property", and a +41.2m Care Operations "gain on revaluation of property, plant etc". Neither of these are 'real income' so if they were taken out, the +$70.5 total falls to a -$31.5m 'Comprehensive loss'.
So the questions I have are: a) is it plausible that combined property has achieved a revaluation upwards of +$102m, esp in the current property market?, and b) should these revaluations be included in an income statement at all?
If that's how Brent had been handling queries & visits from institutional shareholders and brokers/analysts, hardly a wonder that the stock has been struggling to find support!
For those who are unaware, most of the institutional investors these days will not invest in a company until their analysts have visited a company and/or have a good discussion with the management of the company. If they find that the management are evasive and non-specific when they are asked specific questions, those are red flags which mean they avoid the stock.
BaaBaa ..a very good question (as Brent would say)
Oceania have classified most of their care suites as Property, Plant and Equipment and account for revaluations in a Revaluation Reserve and shows up in Other Comprehensive Income.
And yes total revaluations (property and care units were over $100m in F24. The combined does boost the Balance Sheet as it a component of Shareholder Equity….the ‘value’ of the company.
Oceania seems to highlight Total Comprehensive Income as the profit they made …rather than just the reported NPAT
They went great lengths in educating the market why the Total Comprehensive Income is the real profit figure …below is what they used a few years ago as to how it works
Clear as mud eh
IF you are taking out those revalutions you may also want to reverse out the depreciation and impairments as well, which would make things less worse.
You can play the game of what you wish to adjust for when forming your 'true' picture of how the company is doing....
But I have to say that my analyses of the accounts shows that this is poorest performance in the last four years!
Where do I look? Thanks.
@Snow Leopard & @Winner69, thanks for your replies. I was wondering whether they are genuine 'revaluations' anyway, or if it's a co-incidence that the total assets have gone up by about the same amount, which could be a revaluation of existing assets, but could also be new property coming on the books from completed developments?
As @Winner69 says, "clear as mud".
... deleted, figured it out.
Page 64?
"Increases in the carrying amount arising on revaluation of land and buildings above cost arecredited to the asset revaluation reserve in other comprehensive income; increases that offset previous decreases taken through profit or loss are recognised in profit or loss. Decreases that offset previous increases of the same asset are charged against the asset revaluation reserve in other comprehensive income; all other decreases are charged to profit or loss. When revalued assets are sold, or held for sale, the amounts included in the reserve are transferred to retained earnings."
Hi snow, do you mean your analysis?
Would you care to share with the thread just four of 5 bullet points to highlight why you think it's the poorest performance in 4 years?
Perhaps highlight 5 metrics against prior years to show what you're seeing.
Thanks in advance.
Definitely not ideal when his answers are so vague.
But I can’t understand why he would do that? Clearly some head winds, but nothing insurmountable that would make him duck and dive like that?
Or is it more that he has just checked out and doesn’t give a sh1te anymore?
Some of you may have listened in on previous calls so can offer an opinion on whether this is how he usually is or just in this last call before he moves on.
Does anyone know anything about the new CEO, Suzanne Dvorak? This is her bio on LinkedIn:
Suzanne is an experienced retirement living/aged care executive and external advisor.
As an Industrial Advisor to EQT Group, Suzanne advised in the acquisition of Stockland Retirement Living and was transitional CEO for the newly rebranded business, Levande – one of Australia’s largest retirement living providers with 10,000 residents and 58 retirement villages (formerly owned by Stockland).
Prior to her role at Levande, Suzanne was Managing Director of Bupa Villages and Aged Care – Australia, where she oversaw a team of more than 10,000 employees across 72 care homes to support the needs of 6000 residents.
Suzanne’s experience extends to Executive General Manager, Residential Communities at Australian Unity, with responsibility for the residential communities portfolio – including 18 retirement communities and five aged care residences.
As CEO of Vivir Healthcare, Suzanne was responsible for the delivery of care services to 20,000 patients at residential aged care facilities, hospitals, day therapy, community, medical centres, retirement villages and at home.
Suzanne has also dedicated her career to social justice initiatives, working across health services, government and not-for-profit organisations.
In 2018-19, Suzanne was Interim CEO at safe steps Family Violence Response Centre - Victoria’s state-wide first response service for women, young people and children experiencing family violence.
Following more than a decade leading the Australian team at reproductive healthcare provider, Marie Stopes International, Suzanne was appointed CEO of Save the Children Australia – heading the Australian contingent of the 29 member nation alliance and delivering programs in over 120 countries.
Suzanne has also worked for the United Nations Transitional Authority in Cambodia and Thailand, Telstra and the Australian Red Cross.
She is currently a Non-Executive Director of UNICEF and, in 2005, was recognised for her outstanding career achievements – winning the Hudson Community and Government Award at the National Telstra Business Women’s Awards.
Only potential ‘blemish’ I can see could be her short stint at Levande.
But I actually think it is a good thing she was prepared to pull the pin when she could see there was a misalignment with her vision and the owners.
****
1. **Transition and Departure from Levande**: Suzanne Dvorak's tenure as CEO of Levande, a retirement living brand, was relatively short. She left the company after about seven months. While this could raise questions, it appears to be related to strategic differences rather than any specific controversy. Her departure was amicable, and she was praised for her contributions during a period of transition [oai_citation:1,EQT Infrastructure launches new retirement living brand Levande – with Suzanne Dvorak as CEO and David Gonski as Chair](https://www.theweeklysource.com.au/t...onski-as-chair) [oai_citation:2,Kevin McCoy steps in as Interim CEO of third largest village portfolio, Levande, as Suzanne Dvorak departs](https://www.theweeklysource.com.au/i...dvorak-departs) [oai_citation:3,Kevin McCoy to stay on at Levande as CEO - Australian Ageing Agenda](https://www.australianageingagenda.c...evande-as-ceo/).
2. **Strategic Differences**: During her time at Levande, there were indications that she was advocating for a model that included providing care services directly, which was not fully aligned with the strategic direction preferred by EQT, the owning company. This difference in vision might have contributed to her decision to leave [oai_citation:4,Kevin McCoy steps in as Interim CEO of third largest village portfolio, Levande, as Suzanne Dvorak departs](https://www.theweeklysource.com.au/i...dvorak-departs) [oai_citation:5,Kevin McCoy to stay on at Levande as CEO - Australian Ageing Agenda](https://www.australianageingagenda.c...evande-as-ceo/).
Yeah so it's more about the rest of the paragraph before what you have highlighted.
Page 64 only deals with 'PPE' property not investment property,
'Following initial recognition at cost, completed owner occupied freehold land and buildings and land and buildings under development are carried at fair value. Independent valuations are performed with sufficient regularity to ensure that the carrying amount does not differ materially from the assets’ fair value at balance date. Any depreciation at the date of valuation is deducted from the gross carrying value of the asset, and the net amount is restated to the revalued amount of the asset. In periods where no valuation is carried out, the asset is carried at its revalued amount plus any additions, less any impairment and less any depreciation incurred since the date of the last valuation'.
'A property under construction is classified as land and buildings within property, plant and equipment where the completed development will be classified as such and as investment
property where the completed development will be classified as an investment property. Fair value measurement on property under construction is only applied if the fair value is reliably measurable. Where the fair value of property under construction cannot be reliably determined the value is the fair value of the land plus the cost of work undertaken. Property under construction classified as land and buildings under development is revalued annually and is not depreciated'.
'Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are expensed to the Consolidated Statement of Comprehensive Income during the financial period in which they are incurred'.
So for the PPE property section, a lot of the revaluations are based on the progression of construction and this is very conservatively estimated.
For the investment property it is different again and detailed in another section.
Thanks to SR for posting the transcript. It sounds like there was a testy exchange with Aaron which started with this question:
It appears as if Aaron caught Brent & Kathryn on the hop, but the numbers can be broken down like this:Quote:
Aaron Ibbotson
[snip]my first question is on what I would call core debt, I'm not sure what you would call it, but basically, the difference between what you highlight as development assets and net debt.
So a year ago, you had $600 million of development assets and $550 million, call it, of net debt. Now you still got $612 million over development assets, but $630 million of net debt, call it. So there's a quite material increase and particularly, in the second half, there was a big jump.
So I'm just trying to understand your view of this and how you expect this core debt to develop as you potentially, depending on what the market does, sell down some of your inventory. Is this quarter that's going to continue to sort of creep up, this difference between these 2 numbers?
FY23:
- OCA FY23 presentation page 14 had a graph showing development debt of $446m (Aaron quoted $550m) and 'development assets' of $600m.
- Development debt last year was made up of bonds of $225m + the development facility of $221m.
- Development assets included land $112m, assets under construction $114m + unsold stock of $374m.
Note that the Corporate facility is excluded from the development debt calculation given that was used to fund the 'as built' acquisitions Remuera Rise & Bream Bay. Also note that 'development assets' includes the book value of 'Investment property under development' per note 3.1 and the book value of the column 'Freehold Land and Buildings Under Development' per note 3.2 plus the valuation of new unsold stock. The numbers reconcile ok.
Two issues I can see straight off with this graph is that I suspect some of the undeveloped land at Bream Bay is included in the assets, but has been excluded from liabilities, so there is a potential mismatch. In addition, the book value of the development assets includes fair value revaluations, which were never paid for using debt. But that is a technical observation to which we can turn a blind eye for now. But the point OCA are trying to make is they are showing they have assets that are worth this much that are either being developed or have been recently completed and are available for sale, and we only have this much debt on them. Fair enough.
So now we understand the numbers on that graph that Aaron was referring to.
FY24:
- OCA FY24 presentation page 14 had a graph showing 'development debt' of $534m (Aaron quoted $630m) and 'development assets' of $612m.
- Development debt this year is made up of bonds of $225m + the development facility of $309m.
- Development assets included land $112m, assets under construction $147m + unsold stock of $353m. These values reconcile to assets under construction.
I suspect what caught them on the hop was the numbers quoted by Aaron were not quite right. But in answering such a question, you never 'guess' as to what the answer is. You defer until you have the numbers in front of you. And you certainly don't verbalise the musing that go in your head when you hear such a question. Notice Brent did handle the subsequent question correctly:
Back to Aaron's first question. What actually happened is 'development debt' increased by $88m but 'development assets' only increased by $12m during the year. This is what Aaron wants to understand - what is this gap of $76m? Notice Aaron thought it might be due to wholesale devaluations of unsold stock which was not the case. And I suspect it has nothing to do with transfers between the Corporate and development facilities given the balance on the Corporate facility remained unchanged (happy to be proved wrong).Quote:
We're happy to sort of answer that question, and we're happy to make it available for others, so can we take that off-line so that we can actually do the maths that you've just done to actually provide the right response?
This is typical of the sort of question and/or analysis you get when you look at half the picture. An answer eventually came out that there were deferred settlements on some new sales plus other musings. This is what I can see when we look at a few different numbers:
- Firstly Accounts Receivable increased from $109m to $125m which would account for *at least* $16m. In the transcript we heard new sales must pay down the development facility. As the AR balance increases, then the development debt facility is not repaid. This $16m is further proved by comparing new sales volumes x average sale prices, to the actual receipts for new ORAs during the period.
- This is a surprise to me that OCA are offering care suite ORAs 'on tick' per the urgent needs comment and also the 10% deferred settlements. But it is what it is.
- The reason I say 'at least' $16m is because we do not know the split of new sale receivables versus resale receivables. In addition, receivables in excess of 12 months increased by $10m during the year - some of that could also be from sales of new stock.
- Also, note that the cost of 'other assets under development' increased in value by $33m.
- Lastly, under the 'completed investment property' section in note 3.1 there is $60m of capitalised expenditure that was not transferred from 'investment property under development'. Last year this figure was $5m. I suspect that $60m was also paid for using the development facility but it is not showing up under the 'development assets'. They mentioned the ability to shuffle funds between facilities - maybe this is that.
Adding all this up: $16m in AR + $33m other assets + $60m capitalised directly - $21m reduction in new stock = $88m which more than explains the 'gap' of $76m.
Conclusion: explained / solved. Not an issue.
Kathryn: where shall I send my bill? :)
Good post Ferg, and logically laid out.
But how do we test/verify the various assumptions you have made?
1. Inclusion/exclusion mismatches for specific assets and liabilities.
2. Impact of fair value revaluations on book values.
3..Accounts Receivable increases and deferred settlements affecting development debt.
4. Unaccounted capitalised expenditure and fund shuffling.
Excellent post Ferg and I agree with your analysis as well as how they handled it on the call. I also did not recognise the numbers Aaron was highlighting, particularly the development debt. And his line of questioning made it seem like he didn't really understand the accounting. Where was he suggesting the money had disappeared to?
Absolutely the right thing to do is not get into an argument with an analyst or tell them you think their numbers are wrong. Sort it offline and make the answers available to all shareholders.
Now there was another comment you made in your post that I would like to highlight and encourage everyone to think over very carefully as I think it perfectly highlights something that a lot of people are missing.
'the book value of the development assets includes fair value revaluations, which were never paid for using debt'
The best way is to;
Get the Summerset IPO document and read that in its entirety.
Read all of the Summerset Annual reports and pay very particular attention to the notes to the financial statements, study the way the numbers move over the years particularly between the three statements.
Get the Oceania IPO document and study it in its entirety
Read all of the OCA reports and follow the same process as you did with Summerset.
Along the way while you are doing this work, stop often and ponder the economics and the nuances that are outside of the financial statements.
Read the Focused compounding analysis that ValueNZ posted
Study the Sharetrader SUM forum from 2011 through 2014.
Meet up with someone on Ferg or Mav's level of understanding of these businesses and spend a day or two talking it over and getting them to explain anything you don't understand after already having undertaken the work above.
Below are the Revenue and net profit figures for SummerSet from 2013 through 2023.
The reason I have used SUM is that nobody is challenging the business model like they are with OCA
What you all need to ask yourselves is how can net profit be higher than total revenue for a decade, AND for it to be true and accepted by the market.
These businesses are not easy to understand and the accounting is very complicated, which is forced on them by the rules. The conventional rules are not made for businesses like these.
Some things to think about, the inter relation between the operating business and the development business, the relationship between CAPEX and the cash flow statement and the OPEX and the income statement. Think about how the development margins are displayed and recognised on the income statement.
And finally and most importantly, think about the biggest reward and the very golden Goose - the ORA money is totally invisible on the income statement. You will never see this as profit, only the DMF and even then only as it's recognised/accrued. You will see the benefits of having this money appear over time through the income statement but in a convoluted way.
I will be blunt here, most people on this forum have no business owning this company, the accounting is extremely complex and the model is not easy to understand as we see here every day.
Revenue 45, 54, 68, 86, 100, 137, 154, 172, 202, 237, 270
NPAT. 34, 54, 84, 145, 239, 214, 175, 230, 543, 269, 436.
Even the other day in the results release it was put first -
Total Comprehensive Income of $70.5m and Net Profit after Tax of $31.5m for the year ended 31 March 2024 were 104.3% and 104.5% higher than the prior corresponding period of $34.5m and $15.4m respectively.
And they have at times educated punters as to what it means like in that graphic I posted yesterday
Usually a bigger number than NPAT so why not skite about it.
Yes they do Underlying Earnings as well but you get the feeling they prefer Underlying EBITDA more
It’s the Oceania way of doing things …put out heaps of metrics ..helps the obfuscating
I don't get this statement. I have investments in many companies I don't fully understand. Personally I don't think it's necessary to have a nuts and bolt deep understanding of every nuance of a business. If that were true I doubt anyone would invest in anything. My main reason for buying OCA is the ageing population. Simple as that for me!
“My main reason for buying OCA is the ageing population. Simple as that for me![/QUOTE]”
Seems like a pretty fair opinion to me, no one escapes this (aging) and it’s a fundamental driver of these businesses
That is correct.
Given the convoluted nature of the accounts I set aside some time once a year to fully reconcile the OCA accounts so that I know what is going on. I did that last night. I start with the Opening values on the Balance Sheet and then process every debit and credit for every line (plus some more) by processing the values from the P&L, the cash flow, various notes and the presentation. This allows me to 'prove' the closing values on the Balance Sheet. It's no small task hence my closing quip to Kathryn. I do it to see what has been going on behind the scenes and if there are any accounting 'funnies' that concern me.
Addressing mistaTea's question these statements are not assumptions: $60m capex coded directly to investment property which is not a 'development asset', $33m capex on dev assets and negative $21m reduction in new stock. These 3 alone add to $72m, versus $76m to be explained. The last 2 items are known to directly impact dev debt per statements made by OCA. If someone wants to prove how the other $60m capex was funded then I'm all ears but it is a very safe assumption this was funded by dev debt if you analyse the numbers. As an aside (and the BS / sniff test), it is business 101 to use long term debt to fund long term assets so it makes sense. Based on the flow of debits and credits, and the requirement for new sales to repay dev debt, the last $4m must be sitting in accounts receivable, although I suspect the actual value is higher given other factors. And if it's not that then it's not material to answering the question.
I often see people jump to conclusions (online and in the real world) and assume something is incorrect based on their not understanding something. I hope the professional analysts are not starting from that position. It's a shame OCA couldn't answer it succinctly because it is not a good look - but it wasn't helped by Aaron quoting the wrong numbers. But OCA did not help by departing from the historic norm and using dev debt for non dev assets and not explaining that clearly enough.
'Development assets' is a specific measure used by OCA per the reason I outlined. To compare just the movement in that to the movement in total or nett debt is only looking at half the picture. If you follow the numbers I posted and the references, you will see the $60m of capex coded directly to investment property was (inadvertently) omitted by Aaron. So whilst he might not be 'wrong' with the numbers he quoted, he was 'wrong' with the comparison he tried to make.