LCOMF (LCOMF) Q4 2026 Earnings Report, Transcript and Summary

Good morning, and welcome to Lifestyle Communities Investor Analyst Conference Call. My name is Anita Addorisio, Company Secretary of Lifestyle Communities and moderator for this call. This webinar will be recorded for the benefit of those who are unable to attend today, and the webcast will be available upon request. Please be advised that our conference will strictly be limited to 45 minutes. Due to the number of attendees, we will endeavor to address as many questions as possible during this time. We encourage you to contact the company via the Investor Center available on the company's website should you have any queries following today's update. Our presenters today are our Chief Executive Officer, Henry Ruiz; and Chief Financial Officer, Angela Farbridge-Currie, who will provide an update on the FY '26 results as released to the market this morning. Also joining us this morning is Clare Lewis, Investor Relations. This will be followed by a Q&A session for which I now outline the procedure as presented on your screen. [Operator Instructions]. I now invite our CEO, Henry Ruiz, for his presentation. Over to you, Henry.

Thanks, Anita, and good morning, everyone. Thank you for joining us for our FY '26 full year results. I'm joined today by Angela Farbridge-Currie, our CFO; and Clare Lewis from Investor Relations. The story of FY '26 is one of renewal and transformation for our business. Over the past year, we rebuilt sales momentum, strengthened our financial position, reduced inventory and materially improved the underlying foundations of the business. We have taken deliberate action to improve operating discipline, restore confidence in the business and position Lifestyle Communities for sustainable growth as market conditions improve. At our core, Lifestyle Communities reimagines the Way to Live for independent downsizers. Our model combines affordable, contemporary homes with vibrant community living, helping homeowners unlock equity and live active independent and connected lives. Delivering on our purpose is not only important for homeowners, it is also commercially significant. Customer appeal, satisfaction and advocacy helped drive demand across our portfolio. As the homeowners choose Lifestyle Communities and enjoy positive living experiences, we strengthen our recurring income streams, improve business resilience and create long-term value for shareholders. As we reflect on FY '26, the business has emerged stronger, more focused and better positioned to capture the opportunities ahead. This snapshot captures some of the highlights. FY '26 marked a significant step forward in rebuilding sales momentum with the team achieving 400 sales, including 216 net new home sales, up 55% on the prior year. We also welcomed over 410 new homeowners into our communities, helping more Australians embrace an active, connected and affordable lifestyle. The portfolio now includes 4,368 homes under management across 25 operating communities, and we have just under 1,400 sites in our development portfolio. Financially, the business generated $94.9 million of operating cash flows and a statutory profit after tax of $46.9 million. The team also made strong progress in reducing completed home inventory by 55%, which when combined with the finalization of land bank sales, enhanced our balance sheet strength and contributed to $186 million reduction in net debt. Our investment properties were independently valued as at the 30th of June 2026, with the carrying value increasing to $952.9 million. NTA increased to $5.59 per share. Although external conditions remained subdued, we made major strides in strengthening the underlying business platform, creating a more capable, scalable and valuable foundation for future growth and shareholder returns. FY '26 marked a decisive step in our transformation journey. As we strengthened the foundations of the business, we remained focused on restoring momentum, enhancing execution and positioning Lifestyle Communities for long-term growth. That momentum is most evident in our sales result. Net new home sales rose 55.4% to 216, supported by our market-led pricing strategy, improved conversion performance and the growing strength of the Way to Live brand. Equally important, as I touched on already, we reduced the level of unsold inventory by 55% from 269 homes to 121 and aligned new build orders more closely to sales rates. That is an important sign of greater operating discipline. And thanks to our team's customer-centric approach, homeowner satisfaction reached 78.9 the highest result since measurement began. Handing to Angela to walk through our overall results snapshot.

Thank you, Henry, and good morning, everyone. There are a number of key messages in the FY '26 result that I'd like to highlight. Firstly, as Henry mentioned, new home sales improved materially, increasing from 139 in FY '25 to 216 this year. This improvement was driven by the Way to Live brand campaign, execution of our market-led pricing strategy and a stronger sales conversion focus. Settlements were lower than the prior year with 240 new home settlements compared with 268 in FY '25. As previously flagged, this reflects the lag from sales to settlements due to lower sales rates over the previous 24 months. When we consider this against a softer residential housing market, which is experiencing lower transaction volumes and vendor price reductions, our sales to settlements conversions have pleasingly remained strong. Our annuity rental income continued to grow with rental income increasing 12.4%, driven by both the annual rental increase and the additional 240 new homes settled during the year. Consistent with our half year reporting, our total annuity revenue was reduced year-on-year due to DMF revenue not able to be collected on contracts impacted by the VCAT decision. And finally, operating profit after tax was $25.4 million, down from $45.2 million in FY '25. The operating earnings result is reflective of the lower new home settlement volumes and price points, the lower DMF revenue following VCAT, and consistent with our half year result, a greater portion of interest cost expensed against the land bank. Pleasingly, from a balance sheet perspective, our disciplined strategy execution has enabled us to reduce net debt materially from $460.5 million in June '25 to $273.7 million at June '26, which has assisted us with strengthening the balance sheet as we head into FY '27.

Moving to our business strategy. Our strategy is anchored in a very simple idea, reimagining the Way to Live for independent downsizers. The business aims to provide affordable, contemporary housing in beautiful community settings. The land lease model enables homeowners to downsize, unlock equity and access resort-style amenities and community living. We bring that strategy to life through 4 operating pillars. We call these Way to Live, Way to Grow, Way to Build and Way to Operate. These pillars give us a practical framework for how we can improve the homeowner experience, strengthen demand generation, deliver communities with greater discipline and the operations of the business, and doing that more efficiently. They also shape the rest of this presentation. Way to Live is about the strength of the homeowner experience. We continue to invest in our communities, enhancing amenities, modernizing how we connect with homeowners and lifting the consistency of the experience we deliver. The commercial importance of this is clear. A better experience supports referrals and advocacy and underpins a resilient rental annuity stream.

Our portfolio of homes under management grew in the current year by 5.8% to 4,368, up from just over 4,100 in FY '25. Growing the number of occupied homes under management remains central to our strategy and the long-term value of the platform. Our annuity stream continues to underpin our platform with site rental fees indexed at the greater of CPI or 3.5% per annum. The rental increase applied for FY '27 was 4.6% and became effective from the 1st of July.

This slide shows the progress we are making in the homeowner experience. Overall, customer satisfaction has improved across each 6-month cycle, increasing from 76.7 in March 2025 to 78.9 in March '26. Importantly, we have evolved to a more scalable homeowner engagement model, with the homeowner survey now serving as our primary source of insight and helping shape our priorities, community action plans and decision-making. Put simply, happy homeowners equals more referrals. Moving to Way to Grow, which is about improving both sides of the sales process. That means strengthening the inquiry to appointment journey and supporting homeowners through the process of selling their existing home. The opportunity ahead for Lifestyle Communities remains compelling. The powerful forces that have underpinned our business growth for more than 20 years are not only intact but accelerating, including population aging, our strong need for affordable housing options and a large underpenetrated market. Our value proposition remains simple: high-quality community living typically priced around 80% of the median house price in the relevant catchment with flexible management fee choices and strong referral dynamics. It is widely recognized the Victorian property market has remained subdued, and it is with this context that our sales momentum is ever the more pleasing. As you can see, our new home sales performance improved materially in FY '26. The improvement reflects 3 key things: the effectiveness of our Way to Live brand campaign and positioning, the face-to-face appointment to sale conversion rate improving from a historical level of around 22% to now averaging circa 25%, and the impact of our market-led pricing strategy. This gives us confidence that our underlying sales process is working despite the subdued Victorian property market. Resales performance was also equally strong in FY '26. This is such an important aspect for our homeowners when it comes time for them to sell and equally brings the next turn of the management fee into play for our investors. We delivered 184 established home sales and 171 settlements, which was the strongest level of resales in recent periods with 55% growth year-on-year. The upfront management fee option has also expanded customer choice. Since its implementation, 28% of net sales have selected the upfront fee option, supporting flexibility and different customer affordability preferences. This is an important evolution in our business model because it provides customers with greater choice while maintaining the management fee framework. FY '26 provided clear evidence that we are building something far more powerful than a single sales initiative. By strengthening our brand, increasing referrals, improving prospect qualification, enhancing our product appeal and expanding customer choice, we are creating a repeatable demand engine capable of supporting sustainable growth over the long term. As we turn our mind to FY '27, our focus is clear. It's execution. We will continue to build awareness of Lifestyle Communities through our Way to Live campaign and growing homeowner advocacy and referrals. We are becoming more targeted in how we engage customers, focusing our efforts on motivated prospects and improving conversion rates. At the same time, we continue to refine our product and pricing and leverage our management fee choice. Supported by a 23% increase in brand awareness in FY '26 and stronger homeowner satisfaction, we believe we are well positioned to capture future demand. Way to Build is about re-engineering the development process to drive margin expansion. We are focused on market-led product and pricing, refined home designs, more efficient project sales models and capital discipline. As we turn our focus to activating a new community in FY '27, the team is focused on 5 key levers to enhance profitability and long-term returns. These include simplifying home specifications to reduce complexity and improve build efficiency, leveraging a competitive tender process to optimize construction costs, refining our clubhouse design and delivery to ensure amenities are aligned with homeowner needs while also maintaining capital discipline. And we are also exploring new opportunities to enhance the revenue side, enhancing rental yields across the portfolio. And last but not least, unlocking the benefit of lifestyle managers living off-site, which creates an additional home that can either be sold and generate annuity revenue. Together, these initiatives are expected to support stronger community economics, improve returns on invested capital and enhance the scalability of future developments. The goal is not growth at any cost. It is disciplined growth that enhances shareholder returns, preserves margins and positions the business to perform through both favorable and challenging market conditions.

The group has a meaningful pipeline of communities still to be delivered, which we remain focused on delivering in a disciplined manner, balancing growth and capital management. With a portfolio and pipeline of 5,750 homes and over 4,300 of these currently occupied, we remain well positioned with a 3- to 4-year land supply. In our developing communities, there are just over 640 sites remaining to settle. And in addition, we have a further 738 homes remaining to be developed from the land bank. Following the settlement of the planned land sales in FY '26, we retain a well-balanced portfolio that supports the next phase of development pipeline as existing projects complete. As we deliver the pipeline, we will continue to be market-led in our pricing strategy, which will impact development margins as we follow the cycle and work through the existing projects. However, as we've previously noted, the ongoing demand drivers for the sector support future project delivery with our ultimate goal of growing the number of homes under management. Turning now to inventory. And as we've previously highlighted, inventory reduction was a key focus area in FY '26 and progress has been significant on this front. Since June 2025, unsold inventory reduced by 55%, down from 269 homes to 121, with most communities now back within our optimal inventory ranges. We achieved this through our targeted pricing strategies, focused selling towards completed homes, and matched build rates more closely to sales rates. As you can see from the table, both our Deanside and Woodlea communities remain the 2 communities with slightly elevated inventory, which we'll continue to manage during FY '27. This is a clear example of the more disciplined operating model we're embedding across the business with close collaboration between our sales, marketing and project teams, ensuring that we will remain focused, responsive and aligned to strategy.

Moving to Way to Operate, which is all about strengthening the operating platform. Think of it as our corporate functions. The business today is on a stronger footing from the changes the team implemented over the past 12 to 15 months. We have fortified the balance sheet, aligned our organizational structure to our strategy and rightsized our workforce by circa 10% year-on-year. This process, coupled with operational cost reviews, including downsizing of the support office, is forecast to deliver around 7% cost reductions in FY '27. We've also been actively managing Lifestyle's response to the 2025 VCAT decision and implications. And we've optimized and refined the deferred management fee model in light of the regulatory changes. And we've also entered into an agreement to acquire the balance of the Chelsea Heights joint venture. In summary, we are improving business efficiency and creating a platform that can scale more effectively when market conditions improve.

The balance sheet is materially stronger than it was 12 months ago. As previously reported, in January this year, our debt facilities were restructured and reduced to $375 million. The refinancing simplified the financing structure, rightsized our facilities to the medium-term needs of the business and provided ICR covenant relief until the 30 June 2028 reporting period. As we've also noted this morning, and as you can see on the graph in the top right-hand side, our net debt reduced from $460.5 million at June '25 to $273.7 million at June '26, a reduction of $186.8 million. The delivery of these initiatives gives the business greater flexibility, allowing time for recovery in the Victorian property market. And importantly, we've achieved this balance sheet strengthening while still maintaining a sufficient development pipeline.

This is an important slide because it speaks to our business model durability and customer choice. The July 2025 VCAT decision specified that a deferred management fee needs to have a fixed starting point, meaning that a deferred management fee based on purchase price is permissible. The model we introduced in July 2025 is consistent with that VCAT decision and more recently, the new proposed Consumer Legislation Amendment Bill of 2026. As per our ASX announcement on the 18th of August, the Court of Appeal will deliver its judgment on the group's appeal later this morning. Our current provisioning in the June 2026 financial statements reflects the ruling under the original VCAT decision. This is an important point to note. Should the decision be favorable, this is expected to result in a reversal of the provision. And consistent with previous announcements, regardless of the outcome of the appeal, we committed to offering current homeowners the option to move to a deferred management fee based on purchase price instead of resale price. That said, we anticipate homeowner interest to take up that offer will be more likely if Lifestyle Communities is successful at appeal. We will update the market once the judgment has been delivered. Independent of the appeal process for our new customer prospects only, we have also introduced choice. They can pay an upfront management fee of 10% of the purchase price or they can defer the management fee and pay up to 20% when they sell and leave the community. For shareholders, the key point is that we have not waited for an appeal outcome to drive the business, and that is reflected in our sales results. Giving customer choices around their management fee preserves affordability for incoming homeowners and allows homeowners to retain future capital growth.

Turning to the income statement. As we've noted, we've reported an underlying operating profit after tax of $25.4 million. Our FY '26 results were underpinned by the rental annuity stream with our operating business delivering site rental income growth of 12.4% from the prior year. This growth was driven by more homes under management and the annual inflation-linked rental increases. Community operating margins moderated slightly to 53.9% in FY '26, reflecting lower margin contributions from developing communities as they achieve stabilized occupancy. Improvement to operating margins is expected in FY '27 as these communities continue to sell down and stabilize. In addition, in late FY '26, we commenced a process to optimize community operating margins through operating efficiencies and portfolio scale benefits. Development margins at 10.4% are down from prior periods and reflect the impact of targeted price adjustments to meet the market with the average price per settled home, excluding GST, decreasing from $608,000 in FY '25 to $589,000 in FY '26. Lower development margins are expected to continue for a period of time as we work through the inventory position and recovery of the Victorian property market. Updated pricing assumptions for the remaining stages at the Woodlea project resulted in the recognition of a $1.7 million inventory impairment provision at 30 June '26, with the anticipated future loss recognized upfront in the current year result. Finally, as I noted, operating profit after tax was $25.4 million, which was lower than the prior periods due to lower new home settlements, reduced DMF revenue following the VCAT decision and a higher proportion of interest cost expense relating to the land bank. While the amount of interest cost expense has increased, the total interest cost for the year was similar to FY '25. As Henry has touched on, this result reflects deliberate trade-off of development margin to support and drive sales momentum, clear inventory and strengthen the business for improved through-the-cycle returns. The balance sheet has strengthened over the year. Net assets increased to $680.8 million or $5.59 per share, driven by the full year result. The focus on selling through built stock during the year has resulted in a 55% reduction in the number of unsold homes in the system from the prior year and in turn, a reduction in the carrying value of inventories on the balance sheet by $96 million. With most communities now within optimal stock levels, Deanside and Woodlea remain the 2 communities where there is further working capital to be released. The value of our investment properties increased to $952.9 million driven by fair value increases and partly offset by the disposal of the Ocean Grove II land parcel. All of our planned land sales completed during the first half of the year, which when combined with the working capital released from inventory, drove the reductions in borrowings for the year. The reduction in borrowings has improved the loan-to-value ratio to 28.7% at 30 June, down from 47.8% at June '25 and has brought gearing back within the group's risk appetite settings. Turning to the investment property portfolio. The total portfolio increased to $952.9 million at year-end. The growth was underpinned by 2 key drivers: contracted rent increases across the portfolio and the 240 new settlements during the year, which increased the number of income-producing homes within our portfolio. The established communities increased in value by $25.4 million, which includes a $7 million uplift from the valuation of non-VCAT impacted DMF contracts, which had previously been written down. Weighted average capitalization rates firmed slightly to 5.2% from 5.24% in the prior year. The value of our developing communities grew $59.3 million as new homes were settled. During FY '26, we also refined our valuation methodology for developing communities by incorporating independent as-is valuations of the rental, DMF and undeveloped land components, which resulted in a $7.6 million fair value uplift through statutory earnings. The carrying value of the land bank reduced following the sale of Ocean Grove II and a write-down of our inventory, Inverloch and Armstrong Creek sites relating to capitalized stamp duty and GST. Overall, the portfolio value growth continues to be driven by fundamentals being contracted revenue growth, ongoing settlements and the increasing maturity of the portfolio. Turning to the operating cash flow. Despite the lower level of settlements in the year, we generated positive operating cash flows of $94.9 million, up from an outflow of $7.1 million in FY '25. The improvement is a result of a reduction in the development expenditure, which reflects disciplined management of build rates and the completion of clubhouses and civil works at communities in progress, which were ongoing in the prior year. The lower cash interest paid during the year reflects a timing difference with interest payments on the PGIM debt facility payable 6 monthly, each July and January. You can also see in the bottom section of the cash flows, the proceeds received from land sales and the flow-through from repayment of borrowings. Looking ahead, we anticipate positive operating cash flows for FY '27 as projects continue their capital recovery phase.

The business enters FY '27 from a position of greater strength with clearer demand generation drivers, a healthier balance sheet that we believe accounts for an upheld appeal outcome, inventory levels now within optimal ranges across most communities and greater customer choice through our management fee options. While the strengthening of our business fundamentals continues, the progress achieved in FY '26 was both significant and tangible. We reinvigorated the sales engine and delivered a material improvement in sales momentum. We strengthened homeowner trust and satisfaction with customer satisfaction reaching record levels. We improved financial flexibility by refinancing our debt facilities and strengthening the balance sheet. And we advanced planning for our next community launch anticipated in the second half of FY '27, while we continue to progress development across our existing pipeline. While we have been encouraged by the 55% improvement in sales in FY '26, lower sales rates experienced in prior periods are expected to temper settlement volumes in FY '27 due to the normal lag between sales and settlements. Our focus in FY '27 remains firmly on executing our transformation plan, maintaining disciplined supply and demand management, and building a more resilient business for the future. The need for high-quality affordable housing has never been greater. With a clear strategy, a stronger operating platform and an enduring purpose, Lifestyle Communities is well positioned to help more Australians downsize with confidence and enjoy greater financial freedom, connection and wellbeing, while delivering long-term value for shareholders. So a big thank you to our homeowners, our partners, our shareholders, the team and the Board for your continued trust, support and belief in what we are building together. Thank you. Back to you, Anita.

Thank you, Henry. As a reminder, the conference call will conclude at 9:45 this morning. We now welcome your questions, and we'll commence by addressing verbal questions before taking any written questions. I do note on the line, we have Tom from Jarden.

Just be interested, I understand you've provisioned for VCAT, but it would be good to understand what the impact to your gearing would be if the decision goes against you because presumably, that provision would start to be reflected through the debt increasing to repay customers. Is that the right way to think about that?

Tom, yes, you're right in that we have fully provisioned for the VCAT outcome. Ultimately, in terms of the timing and quantum in terms of that outflow and what that looks like, it's really actually difficult for us to predict. So we are quite comfortable that we have provided in full, but we ultimately need to assess the number of claims that come in and that timing of that will obviously then impact the impact of the gearing ratio.

So do you have funding capacity, though, to deal with it in your estimation?

Yes.

Okay. Great. And then the other one I was interested in is, obviously, you've given us very clear line of sight over what settlement -- sorry, what's booked to settle in the year and what's settled so far in '27. Just be interested in a reasonable range of outcomes for '27 based on your current sales rates, maybe a bit of upside, downside sort of range, where do you sort of think settlements could land realistically in '27 based on the kind of sales rates you know today and what's already been presold?

Look, I think probably the best place to go would be looking in the presentation around number of contracts we've got available for settlement as it stands today. I think looking forward, the property market is a little bit unpredictable. So it's hard to know exactly what the sales rates will look like into the further out quarters. We know we've got the right levers in place, and we've proven that over the last 12 months. But your best gauge is probably looking at the contracts that are available for settlement today and then making an assumption based on what you've seen from our sales track record so far.

But realistically, how -- for the next, what, 6 months of sales could sell and settle within the period? Is that the right way to think about it? Or would you say right through to, say, March '27 that you could sell and settle in the F '27 year?

I think that's broadly reasonable as an assumption. What we just know is that there are variances within the Victorian market just in terms of settlement rates. We have seen in the Victorian market right now that settlement timing is starting to extend a little bit. But I think that, that's a reasonable starting assumption, Tom.

Just a final one from me on the upfront fees. I remember your previous management team telling me that there was no demand from customers to offer an upfront fee, which I thought was interesting given you didn't offer one, so it would be hard to know what the demand is. But 28% seems like a good outcome. What are the conversations like with those customers selecting that option? What's their driver?

Yes. Look, we've been very pleasantly surprised. So I mean it tested well. And very transparently, we didn't anticipate it would be as high as what we're seeing. Because we are giving people choice and financially, we don't have a preference which way that goes. People are effectively saying they just, in some cases, don't want it to affect their pension. So that is one of the reasons that people cite on why they go upfront. Another part is also effectively just wanting to take any sort of exit fee off the table for family.

Next, we have Solomon from UBS.

Just on your margins, just wanted to understand 10.4% for the period, but Deanside and Woodlea being a bit more challenged. If you strip those projects out, would your margins be a bit higher? And what sorts the expectations for margins once you cycle out of those 2 projects?

Yes, as we've noted in the presentation, we have provided for a future loss for Woodlea of around $1.7 million, which is the bringing forward of a loss. So naturally, if that was to be excluded and the lower margin project, our margins would be improved if that was normalized. Ultimately, as we've said, the future margins are really reliant on the settlement mix that washes through. But ultimately, as lower project margins cycle off, we do expect to see some improvement to margins, but unlikely within the existing project portfolio.

Got you. Could you give us a sense of the spread between maybe your older projects and the expected margins on the newer ones that you're underwriting?

Yes. We don't give a breakdown of margins by project.

Sure. And maybe just turning to the sales trajectory. There was a decent uptick in fourth quarter versus third quarter. It has moderated a touch in first quarter '27. Just wanted to understand whether that's weaker inquiries or conversion rates and whether you're seeing any stabilization that gives you some confidence that conditions have somewhat found a floor?

Yes. Look, what I've observed over the last 12 months is that it's not -- it doesn't run at a standard tempo throughout every week of each month. It effectively -- there are highs and lows in terms of when people decide to ultimately put their deposit down. Well we've got quite a few people on hold at the moment that typically might have closed a little bit quicker. And the main feedback that you get is, again, people's just confidence that they can sell at the right price for their existing home and in a reasonable time frame. So demand is still coming through. People are just starting to just make sure that they've got high confidence and conviction that their existing property is going to sell at a -- in a reasonable time frame.

Next on the line, we have Suraj from Citi.

Can you guys hear me?

Yes.

We can.

Just a couple of quick ones. So firstly, on the margin side, Angela, you gave us some good color longer term or sort of at least the next few years, you expect margins to be weak, but -- or to be steady rather, from where they are. What do you think needs -- like is it just price growth that we need to see? And then maybe just tying that into the new work that you've shown on the construction side as well, how are you thinking about construction cost growth?

Suraj, I might start and then throw to Angela. So just to clarify, the comment before about margin was really just about our existing portfolio as we sell through that. What we have indicated is that we are planning to start the next community. And we've outlined within the presentation, we think that there are a number of levers that both improve revenue and also impact costs and taking the learnings of the company over the last 20 years to optimize margin. So that would be sort of comment one. Two, we would like to see longer-term margin improve through the cycle. That obviously will be impacted by the property cycle itself. So if it stays flat, it will be a bit more tempered, but we know the property cycle is cyclical. So we're anticipating that, that will give us a benefit. And we've also outlined previously that we will follow the property market up as well. So that will also improve margin. Might throw to Angela for the second part of your question.

Yes. And then with regards to construction prices, we can talk to what we're seeing now. Yes, we have seen price rises like everyone else, we're obviously not immune. But we have been -- those cost increases have been limited to housing given the stage of our current portfolio. Yes, there have been some increases this year, but they have been broadly in line with our forecast. So we just continue to monitor and work very closely with our builder, Todd, and try and push back on those cost increases where we can.

And just elaborating on that construction piece, the new work that you've sort of shown today in the presentation. Just keen to understand, is there scope for more builders to come into the pool or sort of continue working with Todd? And what does that mean, I guess, across the existing portfolio in terms of -- or is it more newer sites that you're talking about when you highlight the new way of construction?

That's right, Suraj. We have highlighted in our pack there that as we look to commence the next project, we will be tendering our construction package and are looking to tender that. For the existing projects, we are contracted with Todd and really happy with the work that we're doing on those sites.

And just final one on, I guess, interest costs more broadly and maybe capitalized interest into next year. Any color you can give us there, Angela?

I think as we've previously said, as that land bank gets activated and those projects commence construction, we will be able to put capitalized interest to those projects as they become activated.

In terms of levels or anything, kind of, cost of debt, sort of any color you can -- any more, I guess, color you can give us?

Not at this stage.

I'm just mindful of time, but we will take one last question. So we have Mitchell from Barrenjoey on the call.

Maybe just quickly, could you elaborate on some of the demand you're seeing for new builds versus trying to sort of understand if it's easier to be selling and settling the completed inventory and how you're thinking about going to FY '27 as that inventory comes down?

Yes. Look, I mean, the company has a historic muscle of being able to sell through stock that isn't on the ground that we've just found ourselves in a position where we had this overhang. And so we've taken a very disciplined approach to direct the sales team to make sure that we clear through that. We are now going to see ourselves start to go back to what the company used to be good at, which is taking orders and demand from customers around what they're really interested in. And the good thing is that the stock that we have on the ground is at the appropriate levels and is refreshed stock. So it's really what customers can touch and feel in terms of what we're going to build next is the direction that we're taking.

And is there still an ICR -- is there still a covenant for home settlements going into calendar '27 as well? I just didn't see that on the slide.

Yes, it's not a covenant. It's ultimately a review event. And ultimately, for the 12-month rolling period ended 31 December, that review threshold is 175 new home settlements.

Thank you. Ladies and gentlemen, we have reached the end of this Q&A session, which brings us to the conclusion of this conference call. Thank you for joining us today. If we were unable to address your questions during this call, just acknowledging we have received some written questions, please be assured that the company will seek to respond to your questions where appropriate. You may also submit any further inquiries through the Investor Center on the company's website. I will now close the webinar and wish you a pleasant day. Thank you so much for your attendance.