I would now like to hand the conference over to Mr. Nathan Blackburne, Managing Director. Please go ahead.
Good morning. Welcome to the first half results for FY 2021 for Cedar Woods Properties Limited. I am Nathan Blackburne, and with me is our CFO, Leon Hanrahan. Together, we are going to give you a summary of our first half financial results, comment on market conditions, provide a portfolio overview, and finish with our outlooks. Cedar Woods is an ASX 300 property company with a market capitalization of around AUD 550 million. We develop a diverse range of products with residential land estates, townhouses, apartments, as well as commercial projects. We've got over 8,400 lots in our project pipeline, and this is across four states. We have quality projects with many in areas of high amenity, close to transport, and commercial hubs. We have a stable board and management with strong governance structures and corporate reputation.
Our outlook is supported by a good bank of pre-sales, which substantially de-risks our earnings outlook, and we have an improving property sector. As many of you know, we have demonstrated our ability to outperform our peers. Our strategy is to grow and develop our national project portfolio, diversified by geography, product type, and price point, so that it continues to hold broad customer appeal and perform well in a range of market conditions. The strategy is proving successful with the strong relative financial results that we've been able to deliver. We have multiple product types in four states and different price points appealing to varying buyer profiles. It's fair to say that this strategy of diversification has helped us through COVID-19 and positions us well for recovery. I'm now going to hand over to Leon to take you through the financial highlights.
Thanks, Nathan. In the first half of financial year 2021, we delivered a net profit after tax of AUD 22.4 million and revenue of AUD 169.2 million from 582 settlements. Revenue and profit were up substantially on the first half of financial year 2020. Earnings in financial year 2021 will be weighted to the first half, and we are guiding to achieve a full year net profit after tax of approximately AUD 29 million, providing strong growth in earnings for the full year. We're pleased to have contracted AUD 380 million in pre-sales by 31 December, up some 12% on the same time last year, with second half earnings now substantially de-risked and a great platform to enter financial year 2022.
We're expected about one-third of these pre-sales will deliver revenue in the second half of 2021, with the balance falling into financial years 2022 and 2023. The board has declared an interim dividend of AUD 0.13, fully franked, providing 4% growth on last year's interim dividend. Full year dividends are expected to be between 60% and 75% of full year NPAT, with the board to review and consider the final dividend after the full year profit result. Our share price, like many of our peers in the wider market, has benefited from stimulus and improved sentiment. Since June 2020, experienced a lift of 19% in the first half. We continue to operate a strong, moderately geared balance sheet.
Total assets at 31 December of AUD 631 million fell slightly in the first half, as we realized inventory in response to the government stimulus. Net assets and equity are up on the basis of the strong result in the first half, reflected in the stronger NTA. Net bank debt of AUD 142.6 million was almost unchanged from the full year. Gearing measured by net bank debt to equity and net bank debt to total tangible assets less cash, remained at the lower end of the company's target ranges. Cedar Woods continues to maintain a strong liquidity position, with the tenures of both its AUD 30 million three-year project facility and AUD 205 million three- and five-year corporate finance facility recently extended.
Interest cover finished the year at a very strong 10x , and the company continues to maintain compliance with all its facility covenants, ensuring continued secure long-term funding availability. Sizable facility headroom of AUD 62 million was available at the end of the half and further increased to more than AUD 79 million by the end of January 2021. This capacity puts the company in a strong liquidity position to navigate the current environment and to continue to roll out its development program and where prudent, take advantage of compelling acquisition opportunities. I'll now hand back to Nathan.
Thanks, Leon. I'll now provide some commentary on market conditions for the property sector. Market conditions were buoyant in the first half of FY 2021 due to a range of factors, including government stimulus for the housing sector, record low interest rates, and an economy that is recovering more quickly than originally anticipated. While the stimulus has been wound back at 31st of December, inquiry and sales levels remain quite strong. Dropping vacancy rates and strong demand is increasing rents and pushing up prices. Detached housing is expected to perform better than apartments over the near term, with the impacts to migration hitting CBD apartments hardest. The reopening of the national border to new migrants will be needed to sustain demand, with population growth expected to return to normal levels after the vaccine rollout.
Low interest rates, pent-up demand, a shortage in supply, and ongoing stimulus will continue to support demand for housing. Conditions do vary from state to state, with the common themes being those that I talked through on the previous slide. Melbourne was subject to restrictions for a large part of the first half, but started to recover well when restrictions eased. Our projects are generating moderate levels of new inquiries and sales. There are some delays to apartment projects, due mainly to lower inquiry, but land estates and townhouse developments are going well and shouldn't experience significant delays. Brisbane's recovery is being driven by the resources sector, which is doing well. Housing stimulus and the relative affordability of housing in Brisbane compared to Sydney and Melbourne is also supporting that market.
We saw good inquiry and sales levels in the first half, and this has continued in the second half, albeit at lower levels, given the winding back of some of the stimulus. Perth saw extraordinary sales in the first half, which has enabled us to sell residual stock and bring forward future stages, and this is mainly due to the general stimulus on offer, but also the relative affordability of housing and decently performing resources sector. It has been pleasing to be able to wind back some of the incentives that have been in place for many years and improve margins. Sales are slower so far in the second half, but remain, again, at decent levels. There are constraints as the home building industry is currently working to capacity following the activity that the stimulus has created.
Adelaide is a mature and much more stable market with a history of much less volatility than the other capital cities. Sales were at moderate levels in the first half, but have improved for our business in the second half as new stages were released to the market, and we have been able to increase prices in recent weeks. I am confident that Adelaide will be a strongly contributing state in coming years. On sales fallover levels around the country, these are not at elevated levels overall for our business. WA fallovers, in particular, have dropped significantly, with fallovers for the other states being only slightly elevated. Now for an overview of our portfolio. We have 30 projects across four states. Our products are very diverse, and this has helped us deliver a smoothing earnings profile. We produce residential lots, townhouses, apartments, and commercial projects.
Our projects are well-known for being in higher performing locations, often near shops, employment, and train stations. Many of our projects are distinctly different from the competition and are in markets where there is limited supply. Finally, our projects are positioned as quality developments within the respective markets that they operate in. These two charts further demonstrate how our diversification strategy has played out. The chart on the left shows the proportion of our portfolio in each state, with WA, then Victoria playing the dominant roles. The chart on the right shows the mix of product in the portfolio, with residential land still being dominant, but townhouses, apartments, and commercial playing an increasing role. We continue to build upon this diversification with the planned expansion of, in particular, our medium-density residential portfolio.
I'll now take you through highlights in each of our states, starting with WA, where we have 14 residential projects and more than 4,700 lots and dwellings. We have projects catering for a range of buyer types and a mix of different products. We are building a greater townhouse and apartment portfolio in project, starting with our Incontro at Subiaco development. There are two new developments delivering first contributions in FY 2021, being Solaris and Ariella North. Both of these have benefited from stimulus, as have all of our land estates. This slide shows two WA projects, Byford and Subiaco. Byford on the Scarp is a premium estate in that district and appeals primarily to first-time buyers. It has benefited strongly from stimulus and accordingly has been performing really well.
Subiaco is a more recent acquisition for our business and is a townhouse and apartment project in a sought-after suburb, and a project that has been really successful in terms of the sales launch, which occurred in November of last year. We have the first two stages of that project almost sold out. Demolition of existing buildings is underway with construction of the civil works and the housing to commence shortly thereafter. We will progressively sell and deliver townhouse stages at that project and finish with the apartment development, which forms part of that master plan. In Victoria, we currently have 10 projects which offer a wide range of products, including land lots, townhouses, apartments, and offices. One important factor that underpins our Victorian projects is that they are in high-performing locations with little competition and have a really strong appeal to owner-occupiers.
Townhouse sales have been strong, while apartment and commercial projects have been a little slower due to COVID-19. These are starting to pick up, and we have a couple of projects that are due to commence shortly. This is an overview of two Melbourne projects. Williams Landing, firstly, which is a major new town development in Melbourne's west, which continue to perform well with good sales of housing product in the first half. Over the next few years, we will continue to deliver a mix of commercial and residential projects as the town center at this project matures. The second development, Jackson Green, is in the suburb of Clayton South and is 20 km from the CBD of Melbourne, and it's a mixed-density project accommodating townhouses and apartments. We have completed all the townhouses now at this project and have two large apartment developments yet to settle.
Sales have slowly picked up at this project, which will continue to be a strong contributor for two to three more years. Our company recently announced the acquisition of a strategic 21.7 ha site in Melbourne's north, immediately adjacent to the company's existing Mason Quarter project in the suburb of Wollert. The combined project will accommodate a master-planned community of around 800 lots, +2 school sites. Mason Quarter was launched in November, with the first release of 23 lots now fully sold. At this scale, the project will be a long-term contributor to the company's earnings, and first settlements are expected in FY23. Moving to Queensland, we have three projects, two of which are located relatively close to the Brisbane CBD. Ellendale, just 12 km away, continues to progress, with several stages completed in the last year.
Sales are doing quite well, in part due to the federal stimulus, but also because of the quality of that estate. Ellendale has higher-priced lots, which target higher-income buyers than traditional land estates. The second project I'll talk about here is Wooloowin. That is on a site just 6 km north of the Brisbane CBD, and that will deliver a mix of townhouses and apartments. The first stage of this project was recently released with good sales levels, and the pre-sales achieved to allow construction to commence, which is occurring now. We recently announced the conditional acquisition of a site 35 km north of Brisbane in a strong growth area. Burpengary will be a 300+ lot development for which our planning application has been launched and which will deliver a wide range of residential lot product to first and second home buyers. In Adelaide, we have two projects.
Glenside is a stunning project and one of scale in a sought-after suburb. It is 17 ha, 3 km from the CBD and will deliver around 1,000 dwellings. Two stages of townhouses and one stage of apartments have been completed, with a second stage of apartments now under construction. Sales are going really well at this estate, and prices are being progressively increased. Fletchers Slip, our second project in Adelaide, is a townhouse and apartment project in the regenerating suburb of Port Adelaide. Our civil works at this estate are well underway, and we have strong pre-sales. The project will be a really good contributor over approximately a five to six-year period. On our aim of growing earnings, one of the important KPIs for our business is forward pre-sales.
As noted, we have AUD 380 million in pre-sales and at the end of the half, which is up from AUD 340 million at the same time last year. In the context of our annual revenues, you can see that pre-sales for both FY 2021 and FY 2022 already exceed total revenue for FY 2020. We are some way towards returning to revenue levels pre-COVID-19. During the second half, we will continue to add pre-sales for FY 2021 and indeed future years. New project launches and acquisitions will help underpin the growth in our earnings. In the first half of FY 2021, we successfully launched four new projects, two of which were in Victoria, one in Western Australia, and one in Queensland.
In the past year, we have continued to make acquisitions with two new sites contracted, one of them in Victoria and one of them in Queensland. We continue to assess acquisition opportunities in all states in which we operate and consider current conditions to be favorable for doing so. Now I wanted to comment on the outlook. Along with the broader economy that continues to improve, conditions for the new housing sector are expected to remain positive overall, but with state-by-state variations. Most economists are forecasting increased building activity and house prices nationally growing in 2021, despite the housing stimulus easing from the 1st of January. Backed by pre-sales of AUD 380 million and a strong first-half result, the company is forecasting full-year FY 2021 earnings of approximately AUD 29 million, subject to market conditions. We are well-placed to grow earnings strongly over the medium term from there.
We've got a long pipeline of quality projects with many in high-demand, low-supply locations. Finally, we are currently assessing a number of acquisition opportunities in favorable buying conditions, which will serve to support earnings growth in future years. Our presentation concludes with a summary of the investment proposition that Cedar Woods offers. We have a stable and experienced board and management that has proven its ability to differentiate and deliver. We have a track record of consistent profits and dividends with a strong, fully franked dividend yield. We are benefiting from government stimulus and strength in property markets more generally. Our diversification strategy is a key point of difference, and it's proving successful for our business. Finally, CWP's record on total shareholder return has seen the company outperform on both short and long-term time frames. Thank you for listening to this financial results presentation for Cedar Woods.
Thank you. Your first question comes from Joshua Haynes from Rest [Employees Superannuation Trust]. Please go ahead.
G'day, gents. Good result. Thanks for taking the question. I just sort of had a broader question, stepping back a bit, just trying to think about the sort of medium-term earnings potential of the business. Obviously, in FY 2019, pre-COVID, the business was doing sort of AUD high three hundreds revenue and almost AUD 50 million of NPAT. Is the key to getting back to those levels the return of offshore migration? Can the business, just from a domestic demand point of view, get back to those levels? Just trying to work out structurally what the market looks like now versus pre-COVID.
Sure. Thanks for that, Josh. It's Nathan here. We're targeting strong growth on FY 2020 earnings for FY 2021. That approximate number of AUD 29 million means 39% up on the low result of last year. We'll continue to target strong growth in FY 2022. It's important to note that we're already starting to de-risk the earnings for FY 2022 and FY 2023 with significant pre-sales. The pre-sales number that we've quoted, two-thirds of that will support those future years. We're already in a good position to do that. We're using strong language in relation to the growth in our earnings in future years. Yes, migration is an important part of the puzzle for new housing in this country, but there's a couple of factors at play here. Firstly, we expect migration to return to usual levels once national borders open up.
Secondly, there is so much positivity in the market, and in several markets that we're in, such as Queensland and Western Australia, there's significant pent-up demand. In WA, we've had subdued conditions for around six years now. Buyers just sitting on the fence waiting for the confidence to buy. That confidence has come back in a very big way. We think that even just with the domestic demand, if I can call it that it bodes well for our industry and it bodes well for our business in the short and medium term. The last point I'd make is that there are buyer groups that aren't significantly represented at the moment that we expect to come back and support demand, and that's the investor cohort.
With dropping vacancies, increasing rents, and the publication thereof of those things, we expect the investors to come back around the country in a big way. There was even some press on this in today's AFR.
That's more so in the three of the four states we operate in Queensland, WA, and South Australia, and less so in Victoria in relation to those investor demand that we're not experiencing yet, but we anticipate over the next six months or so.
Yeah. Okay. I guess, assumed within your comments around strong growth over FY 2022 and FY 2023, part of that is the migration piece coming back and would it be fair to say that's probably more an FY 2023 contribution in your current?
Yeah, I think the domestic demand now is giving us strong growth off a weak base from FY 2020 to FY 2021. The domestic demand gives us an opportunity to have strong growth from FY 2021 to FY 2022, and even into FY 2023 to some extent. Noting it takes six months to build a land stage, 9 months- 12 months to build a townhouse stage, 18 months + an apartment, that it times quite well if you think of the vaccine rollout and likely timing of opening up of national borders, that when that will kick in, it should play in well to our continued growth story over that medium term.
Yeah. Understood. Just a clarification. I might have misheard. Nathan, when you were talking about Victoria, did you make the comment that Williams Landing residential is expected to continue to contribute for the next two or three years? Was that the comment?
Yes. Williams Landing residential contributed to the first half. There are residential projects at Williams Landing that will contribute for, let's say, another 8 years- 10 years. The project obviously has lots of other uses as well, but residential at that development is very resilient. There's proven and sustained demand. Those projects are relatively high margin, and they will continue to play an important part of our future.
Okay. I thought you made a comment, something about a particular project contributing for the next two or three years. Was that something different?
At Williams Landing, we're selling both apartments and land lots at the moment, and we'll see settlements from those land lots next financial year. As Nathan mentioned, we had previous stages settling in the first half, and apartments are likely to land the year after that.
It was Jackson Green that I referenced in the meeting. We've got the Aster Apartments project and the 100% sold Huntington Apartments project, which are due to settle and contribute over the next two to three years, is what I said.
Okay. Yep. Makes sense. Thank you.
Thanks.
Thank you. Your next question comes from George Batsakis from AustralianSuper. Please go ahead.
Hi, Nathan and Leon. Just a question on your guidance. Net profit forecast of AUD 29 million for the full year assumes about AUD 6 million or AUD 7 million in net profit in the second half. I'm just wondering what the key factor is for the lower net profit compared to the first half. Is it just the lower sales dollars you'll do, or is there some lower margin product you're selling as well? Is margin a factor?
It's a combination of two things. It's delivery of stages and buildings, that we had more projects settling in the first half. In the first half, gross margin was around 33%. That'll settle down to about 30% for the full year. The second half, the settlements taking place then, our margin's just inside that 30%.
Okay. That gross margin level, in the second half of or that 30% gross margin you indicated there, is that now pretty much indicative going forward? I know it will vary a bit with the mix of product, but it has been higher in the past.
Yeah. This will be about the third year that it's hovered around that 30%. I think in the last two years, it was 29% and 31%, and this year, again, around that 30%, and that's fairly indicative of the future. As you say, the different mix of projects settling at different times means it can be uneven in halves and move a little around from there. That's about the mark.
Great. Thank you. That was all from me.
Thank you. Ladies and gentlemen, this is your last opportunity to ask a question.