Good morning, welcome to the presentation of the FY 2026 for Cedar Woods. My name is Nathan Blackburne, with me is our CFO, Leon Hanrahan. In this presentation, we'll provide an overview of our financial results, the current market conditions, our portfolio for the business. Cedar Woods is a long-established property company, delivering projects and growing earnings for shareholders. In our portfolio, we have over 9 pipeline, which is made up by 36 projects across Victoria, South Australia. We are developing approximately 1,100 dwellings and residential lot, the pipeline of projects to support future earnings, we have a long track record in the disciplined execution of it. Diversification is key to our strategy, townhouses, master plan, communities, commercial.
Diversification is key. Conditions are very favorable for our business, expected to be the case for some time yet, noting the shortfall of how our sector is getting. Finally, our balance sheet is strong, and we have some strategic partnerships in place. We're really pleased with the outcomes that the half-year point would result to the full year. In the first half, we delivered a record net profit after tax of AUD 39.6, and 64% higher than H1 FY 2025. This profit was generated from revenue of 240% on last year and came from 642. This results in earnings per share of AUD 47., and 60% on last year. The board has declared an interim dividend of AUD 14, which is up 40% on the prior year.
Bonus Share Plan will remain in operation for the interim dividend. Over the first half, we contracted sales of 756 lots, and at 31 December, we have held presale contracts with a value of over 748, 16% on the AUD 642 million in presales for this time last year. These presales will deliver revenue over the second half of FY 2026, but also into beyond. More detail on the financial point. The strategy to our business. Our strategy is to grow and develop our national project portfolio, product type, and price point, so that it continues to hold perform as well in a range of market conditions. The real point of difference for us effectively translates to a smoother earnings profile. The strategy is proving successful with a strong relative financial with the years.
We have multiple product types in four states and different price points and buyer profiles. In terms of our business model, we create value in three key ways. Firstly, in acquisition-based and have a long track record of identifying and converting high-quality sites. The quality of our portfolio is testament to this component of value in the sector. In the development phase, we engage designers and create a demand sweet spot. We engage builders and oversee the construction process. The value-add area is marketing and sales, where we create quality brands and presale projects before starting construction. As part of our strategy, we are supplementing our thinking in partnership. Our partnering strategy is a strategic pivot that will see an in- coming from these partnering arrangements, leverage our existing development skills, access larger, which in turn supports that diversification.
It generates regular fee income and their profile. It helps us to grow our earnings in a way. Further diversification and greater scale essentially allowably through the cycles. We are now working in partnership with QIC and to provide exciting opportunities for Cedar Woods to participate in projects of scale without committing to the entire capital. QIC and Tokyo Gas are both substantial and experienced partners, thus access to well-located sites in major town centers and townhouses at a time when those housing forms are in very short supply. We have had four projects with Tokyo Gas, two of which are now complete. The intention with both partnerships is more projects, and we continue to evaluate opportunities. We continue delivering the ESG strategy with further investment in our policies, practices, and in climate-responsive development.
Material selection, we're ensuring the sustainability of our core development activities across our portfolio, where we are leading the way in sustainable development, including the award-winning energy-efficient apartments that we're doing at Glenside, and the electricity microgrid that we've put in place at Eglinton Village in the northern suburbs of Perth. Find and develop our carbon footprint mapping activities, supporting. Cedar Woods continues its national partnership, Australia's leading children's education charity. Our flagship Community Grants Program is an adult, and which sees a portion of profits from projects given in the various regions that we operate. I will now.
Thanks, Nathan. Taking a look at in a bit more detail, our revenue and growing margins resulted in a much half compared to the first half of the prior year. In the half, due to 34% more settlements and had a slight than last year. Gross margin increased to 31%, up from 26%. Operating costs are lower due to savings on marketing spend, which general, with a lower level of spend. Higher administration costs were associated with the increased headcount and incentives as we continue to invest in new projects, reflecting it. Finance costs expense were lower than the prior period as a result of, and a higher portion capitalized, reflective of the stage of development. Look at the balance sheet.
Total assets at 31 December were broadly in line with the June 30 balance, with the release of Imbara first half settlements, broadly offsetting the significant investment in development spend in the period. Equity were up 8% from June 30, reflecting the strong first half earnings divided paid period. Net bank debt of AUD 85 million was paid down 40%, measured by net bank debt to total tangible assets less cash, was at a low 10% and net bank debt to equity, reflecting the strong results of the period. Sits below our target range, but will increase over the second half with slightly fewer settlements and across acquisition payments to fund. Gearing is, however, expected to finish the year rather in the high teens. Recovery in 5-year corporate finance facilities shortly after the end of the half, secure long-term funding availability with averages.
We maintain a strong liquidity position, with sufficient facility headroom available at the end of 8.9x, 40% above the prior year, and importantly, comfortably well above 2x. As we mentioned, the company continues to operate a strong liquidity for the first half operating cash flows. During the half, the company generated strong opera, after funding AUD 5 million in new land acquisitions. With the strong operating cash flow, drawn facility headroom of approximately AUD 170 million, maintain strong liquidity even after funding committed acquisition. While we only invested AUD 5 million in the third half on new land acquisitions in the period, approximately AUD 80 million has already been spent growing in half to date, funded by a combination of operating cash flow and the company's corporate finance facility. These are the previously announced Corio and Mount Barker land acquisitions, and we're...
I'll now hand back to Nathan.
Thanks, Leon. I now wanted to touch on the market conditions around the country. There are considerable tailwinds for our business. The chronic shortfall of housing remains a pressing issue, with significant supply gaps. For supply of new housing is nearing the lowest level, we've seen. Housing completions are expected to fall short of the government's target by around 400,000 for the combined capitals by 2029. Our view is ample levels of supply to be provided and for some balance this fact will further support sales, volumes, and pricing going forward. Cedar has had 9,000+ dwellings to supply into this market. The new housing sector, approvals are faster. Some state governments are providing infrastructure effort to get more supply completed. Inside, with the various grants in play for particularly first-home buyers, which are an important buy.
Economic conditions are generally very favorable for our sector, the employment outlook remains strong. The considerable shortage in skilled workers has seen the skilled migrant sector. Net overseas migration numbers may moderate, has a number of factors to weigh up in this, in deciding migration levels. The supply is expected to keep prices, as are expecting further price growth across our capital cities, Melbourne is expected to lead the market covers. I now wanted to provide some insights into our portfolio. Inquiry levels and sales have been very strong for our business. This first chart shows our quarterly inquiries levels from Q1 FY 2020 recent quarter, you can see the gradual increase. We had strong first-half inquiry, with Q2 being 14% up on Q1 and up on the prior corresponding period.
The demand is broad-based across states, and are the most active buyer profile, supported by attractive government incentives. This bodes well for continued strong sales into H2 FY 2026. On sales, we had record quarterly sales in Q2 FY 2026, which were up 20% on Q1 and 17% on the prior corresponding period. Land sales were particularly strong, with steady sales in South Australia and improving sales in Victoria. Strong price growth was achieved in H1, in WA and Queensland, and modest price growth in Victoria. A portfolio of 36 quality projects and a total pipeline of 9,000 plus lots, townhouses, and apartments. There's a good mix of products, price points, and locations, giving us a diverse customer base, create the diversification in our portfolio. In the first chart, you can see the breakdown of our portfolio, good spread of locations.
The second chart is an analysis of our presales, which shows that of our buyers. The third chart shows the varying buyer mix of downsizers, upgraders, investors, and first-home buyers, and with first-home buyers. The fourth chart breaks down, and you can see that landlots in the dark blue are our dominant. In residential projects and over 3,300 dwellings in the pipeline. Most of residential lot, townhouses... We are in a good spread of locations north and south of the CBD. Sales prices continue to grow in the half, further strengthening our margins across WA pro. Sales volumes remain high, and we have strong presales and financial year 2027. Safe delivery, reliable builder partners who are delivering to program and budget. In Victoria, we have 12 projects which offer a wide range of products, including landlots as well as offices.
We have over 13 hectares of high-value mixed-use land at Williams Landing that remains undeveloped and is expected dwellings or strata offices. Sales have allowed modest price improvement at some estates, as expected over the second half. We have six projects in Queensland and have lots and dwellings to deliver. There's a mix of land estates, portfolio, our projects in Queensland are performing well and which is further improving our margins there. Affordable land product has been very strong. The construction sector, the capacity constraints, especially with apartment building. In Adelaide, we have seven project estate. In total, we've got over seven residential lots yet to deliver, a pipeline which will keep us busy for at least a further seven years. Projects are well-established, with strong reputations for quality and for state to make meaningful contributions in the coming years.
We recently added to this portfolio, Barker. Our projects are seeing good sales, volumes, and prices. We think the outlook for the performance of these projects will continue to be positive for at least the. On acquisitions, allocated to locking in acquisitions to support and grow future earnings. We're currently assessing Victoria, Queensland, and WA, which is in line with our strategy. We have ample capacity to fund new acquisitions, with over AUD 189 million of November, and as well, the partnerships that I talked about for the co-fund opportunities as they arise. Several and FY 2026 to date, and additional sites have been contracted, due diligence. During the half, we contracted a site in Aveley, in the northwestern suburbs of Perth. Product development at that estate to meet with high demand, as there's a shortage. Now to the outlook for our business.
Well-placed for further growth in earnings. Conditions for the housing sector are favorable. Our portfolio, the housing shortage, low unemployment, and attractive buyer incentives are all favorable set of conditions. Our balance sheet is strong, with li-liquidity of over AUD 189 million as at 31st of December 2025. Acquisition efforts are proving securely secured, others under due diligence and partnerships in place with QIC. We've got presale contracts of 7 place. These significantly support our earnings outlook for FY 2026 and FY 2027 in particular. We have got approximately 30%-35% for FY 2026, a minimum 20% earnings growth we had guided for previously. Medium term, the company is well-placed, with a pipeline of more than 9 dwellings, offices across our four states. As we go to questions, I will leave you with a slide being an investment summary. Thank you.
Thank you. Press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press on a speakerphone. Please pick up the handset to ask your question. George with Bell Potter Securities.
Morning, Nathan, Leon. Thanks for your time this morning. Just can you maybe walk us through, I guess, the key moving parts in the recent guidance upgrade? It seems like most of the upgrade was driven by, I guess, stronger margin rather than volume per se. Yeah, if you could just comment on, I guess, what update?
Thanks, George. Yeah, the guidance upgrade was the result. There was more price growth achieved in the half across a number of projects, more settlements come into, have come into the half and will come into the year, and marketing costs. The incredibly strong inquiry that we're getting across the country, you know, we can, we can turn down that marketing spend.
Yeah, that's clear. End of the year, is, is that a reflection of just stronger land projects performing, or is there some pull forward in 2027?
It, it's a little bit of both, George, but, but really, you know, just that, those stronger, stronger sales generating, anyway.
Yeah, that's clear. My second question is just on the pre-sales pipeline, those on hand. Could you just give us some color on how much of that's expected to settle in FY 2026 and maybe how much in FY 2027?
George, the, the, the majority of it is 7. there, there is a, there, there is still a good portion coming in, and pleasingly, you know, we're more in terms of FY 2028 with the pre-sales already building for that year. approximately half of it will, will go into FY 2027.
Maybe just one more from me, if that's okay. Just around, obviously, the commentary around the robustness of your demand for, for Cedar Woods' product was very clear. I, I'm just wondering, you know, the market interest rate hike this year, I guess, wondering maybe if you've thought about the impact that further hikes might have on the on, on demand for your product.
Suppose it, it, it, it comes back to the extent of the hikes. You just really have to go back to the chronic shortfall of and the significant task that the industry has ahead of it in full. In our view, a couple of rises, we would expect continued widespread demand across our product types.
That's very clear. Sorry to ask one more question, Leon, if I may, just, down in the first half, but can we just assume that that normalizes back at 50% for the full year?
The payout ratio is we view it on a full year basis, not necessarily tied to the half year profit at all. It's more, we owe total dividends to the final dividend, and there's no change to our 50% payout ratio policy.
Thanks for your time. Cheers.
Press star one on your telephone and wait for your name to be announced. Your next question comes from Larry Gandler.
Great, thanks, guys. Fantastic result. A few questions from me. Just with regards to the projects that appear in your project pipeline, Aveley, and I think there's one Soco here. Aveley, I think you're indicating, sales conditional or purchases conditional in FY 2026, or is that something for maybe FY 2027?
No, there's a planning, and that's why it's conditional. We're very confident on expect this to go unconditional and settle. The, the, the timing of that will be, yeah, it'll be likely 27.
Great. Not sure if I am seeing something new here in terms of Soko, that you can just, describe it?
It's a smaller project in the northern infill site . It's very much in Cedar Woods's sweet spot in terms of product type. It is townhouses the market for expressions of interest on. The builders unlocked strong demand for that product, and that will contribute, Leon, to predominantly FY 2027 and FY 2028.
Fantastic. Have you, is the land for that ex?
We're settled on that.
Great.
Yeah, or earlier even than, it was previously described as Madeley in the pipeline chart. It's not new to the pipeline chart. It's project's advanced. Now, as a project name, we'll, it be in market, selling it very soon.
Okay, great. In terms of second-half settlements, for Corio and Mount Barker and Fairfield, when does that settle?
2026. There's two installments, 2027, and the other one likely in 2028. We did acquisition expenditure at this point in time, with those payments fairly spread out.
Okay, I was gonna sort of ask Nathan itself. Nathan, what does the acquisition pipeline look like to you? Is it feel, in each half, robust and, and, exciting? Do you feel more opportunity, less? Is it more expensive to buy land? What's, what's your perspectives today on the acquisition pipeline?
We're seeing the buying conditions, the number of opportunities is, is quite. In part, is because we've got more people on board looking for them. We, we've got to doing assessment work on at the moment, and a couple of which are contracted, subject to due diligence. Because the shortfall spread in terms of locations and, and product types, that opens up. We're, we're focused on three of our four locations. Australia, we are focused on the other three. We have a slight bias towards medium dense, are also assessing some opportunity at some apartment projects, again, shortfall of supply in that immediate area. Yeah, seeing plenty of opportunities to learn some more, you know, over the half and into FY 2027.
Right, none of those projects you are indeed identified them by name yet...
No.
Other than Aveley? Yeah.
No.
For me, guys, I'll let the next person go.
Once again, if you wish to ask a question and wait for your name to be announced. Your next question comes from Murray.
Morning, Nathan and Leon. Perhaps on the upgrades, what your guidance now implies, half on half in terms of what second-half earnings are going to, sort of 30%-40%, depending on where we sit in the range. I assume that the majority of that top skew this year, around settlement, and we should be aware of in terms of seasonality or, or, spend that may occur in the second half.
Spot on, Murray. It's just timing of stages completing. This year was very, it was weighted to the first half, so we just will have slightly less settlements in the second, a very big Q1 in FY 2027, and likely wide by 2027.
Then obviously, the, the lion's share of settlements, still coming from, from WA. It does look like you've with this, you, you've sort of backfilled the pipeline, in Perth. I was just wondering, I guess first off, how easy or difficult in your acquisitions and new projects stack in WA, given the cost of land relative to the cost of, or the, the, the pricing of housing? Secondly, how would you expect that sort of project, or that, that to evolve over, you know, let's say, a three to five-year period?
In terms of projects stack, we're, we're readily finding on when, when assessed, meet our minimum benchmarks and a lot of opportunities that we're working on that have been sourced off-market, that we're assessing, but we're with them that have been secured off-market, where we've approached the vendor directly. Yeah, we're, we're not, we're not finding vendor expectations too unrealistic, and I, I'm confident that we can continue to make acquisitions on, on reasonable return metrics, as we have done for the past 30-odd years. In terms of the settlement mix, worked very hard on, on execution, giving us a broad customer base.
We like, at time, to have a mix of master-planned communities, delivering land lots, development projects and townhouse projects, and of course, the commercial offerings that come out of our Victorian portfolio. I would like to think that, we, we at any one point in time, like to have a mix of product settling, which means of product that we're acquiring. We can pivot with that product types and towards particular locations where we see a particular short. What's outperforming at the moment is more affordable product, be that land, townhouses, or apartments. We have had a buck that can, or projects that can deliver more affordable land supply over the medium term.
Appreciate the color. Thanks, Nathan.