I would now like to hand the conference over to Mr. Nathan Blackburn, Managing Director.
Please go ahead.
Good morning and welcome to the first half results for FY 'twenty one for Cedarwoods Properties Limited. I'm Nathan Blackburn 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 outlook. Cedar Woods is an ASX 300 property company with a market capitalization of around $550,000,000 We developed 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 4 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 presales, which substantially derisks our earnings outlook, and we have an improving property sector. And 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 4 states and different price points appealing to varying buyer profiles. And it's fair to say that this strategy of diversification has helped us through COVID-nineteen 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 twenty twenty one, we delivered a net profit after tax of $22,400,000 and revenue of $169,200,000 from 592 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 29,000,000 providing strong growth in earnings for the full year. We are pleased to have contracted $380,000,000 in pre sales by 31 December, up some 12% on the same time last year with second half earnings now substantially derisked and a great platform to enter financial year 2022.
We're expected about 1 third of these presales will deliver revenue in the second half of '21 with the balance falling into financial years 'twenty two and 'twenty three. The Board has declared an interim dividend of $0.13 fully franked, providing 4% growth on last year's interim dividend. Full year dividends are expected to be between 60% 75% of full year net profit after tax 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 30 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 $631,000,000 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 strong NTA. Net bank debt of $142,600,000 was almost unchanged from the full year and gearing measured by bank debt, 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. Cedarwood continues to maintain a strong liquidity position with the tenures of both its $30,000,000 3 year project facility and $205,000,000 3 5 year corporate finance facility recently extended. Interest cover finished the year at a very strong 10 times and the company continues to maintain compliance with all its facility covenants ensuring continued secure long term funding availability.
Sizable facility headroom of $62,000,000 was available at the end of the half and further increased to more than $79,000,000 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. So market conditions were buoyant in the first half of FY twenty twenty one 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 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, giving 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 generalist 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 improved margins. Sales are slower so far in the second half, but remain again at decent levels. There are constraints as the homebuilding 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'm 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 4 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. And 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 Encontro at Sujiakko development.
There are 2 new developments delivering first contributions in FY 2021 being Solaris and Ariela North, and both of these have benefited from stimulus as have all of our land estates. This slide shows 2 WA projects, Byford and Subiaco. Bifert 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-nineteen. But these are starting to pick up, and we have a couple of projects that are due to commence shortly. So this is an overview of 2 Melbourne projects. Williams Landing Firstly, which is a major new town development in Melbourne's West, which continued 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 2nd development, Jackson Green, is in the suburbs of Clayton South and is 20 kilometers from the CBD of Melbourne. And it's a mixed destiny project accommodating townhouses and apartments. We have completed all the townhouses now at this project and have 2 large apartment developments yet to settle. Sales have slowly picked up at this project, which will continue to be a strong contributor for 2 to 3 more years. Our company recently announced the acquisition of a strategic 21.7 hectare site in Melbourne's North, immediately adjacent to the company's existing Mason Quarter project in the suburb of Willard.
The combined project will accommodate a master planned community of around 800 lots, plus 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 FY 2023. Moving to Queensland, we have 3 projects, 2 of which are located relatively close to the Brisbane CBD. Ellendale, just 12 kilometers 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 Woolawin that is on a site just 6 kilometers 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
presales achieved to allow construction to commence, which is occurring now. We recently announced the conditional acquisition of a site 35 kilometers north of Brisbane in a strong growth area. Burpengary will be a 300 plus lot development for which a planning application has been launched and which will deliver a wide range of residential lot products to 1st and second home buyers. In Adelaide, we have 2 projects. Glenside is a stunning project and one of scale in a sought after suburb.
It is 17 hectares, 3 kilometers from the CBD and will deliver around 1,000 dwellings. 2 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. Fletcher Slip, our 2nd 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 presales.
And the project will be a really good contributor over approximately a 5 to 6 year period. On our aim of growing earnings, one of the important KPIs for our business is forward presales. As noted, we have $380,000,000 in presales and at the end of the half, which is up from $340,000,000 at the same time last year. In the context of our annual revenues, you can see that presales for both FY 2021 and FY 2022 already exceed total revenue for FY 2020, and we are some way towards returning to revenue levels pre COVID. During the second half, we will continue to add presales 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 4 new projects, 2 of which were in Victoria, 1 in Western Australia and 1 in Queensland. And in the past year, we have continued to make acquisitions with 2 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. So now I wanted to comment on the outlook.
Along with a 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 at house prices nationally growing in 2021, despite the housing stimulus easing from the 1st January. Backed by presales of $380,000,000 and a strong first half result, the company is forecasting full year FY 2021 earnings of approximately $29,000,000 subject to market conditions. And 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.
And 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. And finally, CWP's record on total shareholder return has seen the company outperform on both short and long term timeframes. Thank you for listening to this financial results presentation for Cedarwoods.
Thank Your first question comes from Joshua Hain from Rett Investments. Please go ahead.
Good 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, business is doing sort of high 300s revenue and almost sort of $50,000,000 then perhaps. Is the delta is sort of the key to getting up to those levels sort of the return of offshore migration? Or can the business just from a domestic sort of demand point of view sort of get back to those? I was just trying to work out sort of structurally what the market looks like now, sort of pre COVID?
Sure. Thanks for that, Josh. It's Nathan here. So we're targeting strong growth on FY 'twenty earnings for FY 2021. So that approximate number of €29,000,000 will means 39% up on the low result of last year.
And we'll continue to target strong growth in FY 2022. And it's important to note that we're already starting to derisk the earnings for FY 2022 and FY 2023 with significant presales. And the presales number that we've quoted, 2 thirds of that will support those future years. So 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.
And 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 our 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 6 years now.
Buyers just sitting on the bench waiting for the confidence to buy. And that confidence has come back in a very big way. So we think that even just with the domestic demand, if I can call it that, that it will it bodes well for our industry and it bodes well for our business in the short and medium term. And then 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.
So with dropping vacancies, increasing rents and the publication thereof on those things, We expect the investors to come back around the country in a big way and there was even some press on this in today's AFR.
That's more so in the 3 of the 4 states we operate in, in Queensland, WA and South Australia and less so in Vic in relation to those investor demand that we're not experiencing yet, but we anticipate over the next 6 months or so.
Yes, okay. So I guess, assume within your comments around strong growth over 202023, a 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 Yes, I
think the domestic demand now has given us strong growth of a weak base from 2020 to 2021. The domestic demand gives us an opportunity to have strong growth from 2021 to 2022 and even into 2023 to some extent. And noting it takes sort of 6 months to build a land stage, 9 to 12 to build a townhouse stage, 18 month plus an apartment that at 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.
Yes, understood. And just a clarification, I might have missed it. Nathan, when you were talking about Victoria, did you make the comment that Williams Landing sort of residential is expected to continue to contribute for the next 2 or 3 years? Was that the comment?
Yes. So Williams Landing Residential contributed to the first half. There are residential projects at Williams Landing that will contribute for, let's say, another 8 to 10 years. So the project will obviously had 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 that will continue to play an important part of our future.
Okay. So was it another I just I thought you made a comment something about a particular project contributing to the next 2 or 3 years. Was that something different?
So at William Landing, we're selling both apartments and land lots at the moment. And we'll see settlements from those land lots next financial year. 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 was actually that I referenced in the meeting. So we've got the Astor apartment project and the 100% sold Huntington apartment project, which are due to settle and contribute over the next 2 to 3 years is what I said.
Okay. Yes, makes sense. Thank you.
Thank you. Your next question comes from George Vacca from Australian Super. Please go ahead.
Hi, Nathan and Leon. Just a question on your guidance. Net profit forecast of $29,000,000 for the full year, assumes about $6,000,000 or $7,000,000 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, just the lower sales dollars you'll do or is there some lower margin product you're selling as well? Is margin a factor?
Yes. It's a combination of 2 things. It's delivery of stages and buildings that we had more projects settling in the first half. In the first half, margin gross margin was around 33%. That will settle down to about 30% for the full year.
So the second half, the settlements taking place then are margins just inside that 30%. Okay.
And that gross margin level, is that in the second half of around 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's been higher in the past?
Yes. So this will be about the 3rd year that it's hovered around that 30%. I think last year, in the last 2 years, it was 29% 31%, and this year, again, around that 30% and that's fairly indicative of the future. But as you say, the different mix of projects settling at different times means it can be uneven in the half and move a little around from there. But that's about the month.
Great. Thank you. That was all for me.
Thank you. Ladies and gentlemen, this is your last opportunity to ask a question.