I would now like to hand the conference over to Mr. Adrian Puljich, Founder, Managing Director, and Group CEO. Please go ahead.
Good morning, everyone, and thank you for joining us for GemLife's results presentation for half year 2026. I am Adrian Puljich, Founder, Managing Director, and Group CEO of GemLife, and I am joined today by our Chief Financial Officer, Ashmit Thakral. Before we begin, I would like to acknowledge the traditional custodians of the lands on which our communities are built across Australia. We pay our respects to elders past and present and recognize the important role of First Nations peoples in shaping vibrant and connected communities. Today, I will briefly cover the business overview before Ashmit takes you through the financial results. I will then return to provide an update on the portfolio, our growth initiatives, and the outlook for the remainder of FY 2026.
GemLife's proven vertically integrated operating model and disciplined approach to sales and settlements has yielded a very strong first half set of numbers against the backdrop of a turbulent start to 2026, both here in Australia and abroad. GemLife exceeded prospectus forecasts across our key financial and operational metrics, while also delivering significant growth compared with the first half of FY 2025. Demand across the portfolio remained solid and consistent despite the broader macroeconomic environment. Average home sale prices have continued to increase while our home build margin has remained within our target range of 47%-52% for the eighth consecutive year. We settled 208 homes during the half, 89 more than in the first half of FY 2025, and 16 ahead of the prospectus forecast. Importantly, underlying EPS of AUD 0.154 for the first half has put us ahead of our previous expectations for FY 2026.
As a result, we have upgraded FY 2026 underlying EPS guidance to AUD 0.30-AUD 0.31, representing growth of approximately 27%-31% compared with pro forma FY 2025. I will come back to the outlook in more detail later in this presentation. GemLife is a vertically integrated, founder-led, land lease community developer, builder, owner, and operator with more than 40 years of sector experience and industry knowledge. Our model has two complementary earning streams. The first, we develop and sell homes, generating development earnings and recycling capital into new communities and future pipeline. The second, we retain ownership of the land and receive recurring and growing site rental income from our homeowners. This combination gives us both development earnings today and an expanding recurring income base as communities mature.
We now have 10,452 sites across 33 communities, including more than 2,300 occupied homes, and a development pipeline providing more than 10 years of growth visibility. Vertical integration remains one of GemLife's key sector competitive advantages. We control all facets of the life cycle of a developing and operating community, from land acquisition, civils, through to residential and commercial construction, marketing and sales, and ongoing community operations, which also includes the resale of established homes to future prospective purchasers. Our industry-leading delivery model gives us agility to scale construction in response to demand, greater speed to market, working capital efficiency through home construction progress payments, and the retention of the home building margin that would otherwise sit with a third-party builder.
Importantly, it means we can throttle up productivity to respond quickly when we see demand increasing at certain developing communities, and inversely, temper down productivity when seasonal and/or deteriorating market conditions are in play. GemLife Moreton Bay, which Ashmit will touch on later, is a good example of GemLife's capability to throttle up productivity to respond to market forces in the Moreton Bay Queensland region. Acknowledging GemLife's 10-year development pipeline, investment across the various business units ensures that we can continue to successfully scale the portfolio across the multi-state environment. During the period, we achieved Great Place to Work certification for 2026/2027, becoming Australia's first land lease community operator to achieve this classification. Investing in the ongoing professional development of our employees is an enduring commitment we make toward GemLife maintaining its sector leader status.
We commenced the rollout of our bespoke structured training programs through the QA Build Construction Skills Training Center, supporting both existing employees and future apprenticeship pathways. More exciting news on how GemLife's construction arm, QA Build, intends on remaining a resilient construction workforce, will be shared with you at the full year results presentation. We also launched the refreshed GemLife brand platform and the myGemLife homeowner app, which will progressively provide a central digital platform for communications, bookings, and services across our communities. This app initiative fosters a more personal concierge-style of relationship between GemLife and homeowners, allowing for real-time engagement and connectivity. Finally, we were pleased to see the GemLife Tweed Waters Country Club recognized with three Master Builders New South Wales awards, including Commercial Builder of the Year for the New South Wales Northern Rivers region.
In addition to the successes of the GemLife Tweed Waters Country Club, GemLife Rainbow Beach was crowned New South Wales Land Lease Community of the Year by the Land Lease Living Industry Association of New South Wales. With that overview, I will now hand over to Ashmit to take you through our financial performance.
Thank you, Adrian, and good morning everyone. Turning to slide nine, overall, the group had a really strong first half of 2026, outperforming both the prior corresponding period and the prospectus forecast across key financial metrics. in the first half of the year, revenue increased 86% to AUD 195 million. Underlying NPAT of AUD 58.5 million and underlying EPS of AUD 0.154 were both more than double the pro forma first half 2025 results. These outcomes were largely driven by an increase in the number of settlements achieved, as well as a higher average sales price. As this result marks the end of our prospectus forecast period, we have also provided a pro forma P&L for the 12 months to 30 June 2026, and we are very pleased to report that we outperformed those forecasts by 13% with underlying NPAT of just under AUD 120 million.
These strong outcomes has led us to declare our inaugural distribution of AUD 0.011, which will be paid later this week. On slide 10, we break down the performance on our two main segments that drive the business, development and community operations. Development EBITDA grew 98% from last year to AUD 78.4 million. We have improved our margins, even with taking into account additional marketing expenses for several new projects that will commence settlements in the second half of this year. Community operations has seen strong revenue growth again, driven by additional occupied homes as well as increased site fees. As previously flagged, the operating margin has moved closer to 61% off the back of several new communities incurring costs without any corresponding revenue. Margins at our mature communities have remained in line, and as the new communities begin to add more occupied sites, we expect that margin to increase.
Corporate costs increase as we have invested in scaling the platform following the IPO. Alongside the corporate initiatives that Adrian touched on earlier, we invested in technology upgrades, governance enhancements, and additions to the leadership team to support future growth. Overall, group EBITDA increased 84% over last year to AUD 71.1 million, while maintaining a stable EBITDA margin. Going a bit deeper into the development segment on slide 11, the key financial drivers of this segment are the number of settlements, the average home sales price, and the home build margin. Importantly, all of those metrics were up since last year. Settlements were up 75%, sales prices were up 10%, and the home build margin has now been maintained at circa 50% for what is now the eighth consecutive year. Those factors combined to grow our development earnings. Our sales pipeline has also increased, which is up 50% since December.
As at 30 June, we had 292 homes under contract and an additional 78 homes with Expression of Interest, giving a total of 370 homes. This compares to 246 homes at 31 December. As we have seen across the entire land lease sector, demand has continued to gain momentum, and this was most evident at GemLife Moreton Bay, which I will touch on more later. On slide 12, we give more breakdown on the settlements and sales prices achieved. I will not go into too much detail on this, but the key point that we wanted to speak on this slide is this concept of the development runway that best explains the pipeline that GemLife has access to. The table on the left shows the list of projects where we either have occupied homes or we are actively building homes.
The last column on the right shows the balance of lots at sites that are currently under development, which we are calling the runway of future home settlements. Across projects with homes under construction, we have 3,053 lots left to develop, which is pretty significant. We feel this really highlights the depth of our immediate runway and provides a highly visible source of future settlements, earnings, and growth in the coming years. Adrian will speak more on this later as well. Turning to slide 13, community operations continues to build into an increasingly meaningful recurring revenue stream. Occupied homes increased to 2,324, with the portfolio occupancy remaining at 100%. The average weekly site fee increased 6.4% to AUD 215 ex GST over the first half last year. This was driven by three main factors, contracted increases in the site agreements, which is typically 3.5% or CPI, whichever is the greater.
Secondly, new home settlements coming in at higher rents. Lastly, unwinding of discounts provided to homeowners prior to the completion of the clubhouse. The combination of those factors and the increase in occupied homes has seen the site rental income achieve a 29% compounded annual growth rate over the last four years. As we work through our pipeline and runway, we expect rental income to continue scaling and contribute a larger proportion of group earnings over time. Slide 14 demonstrates both the strength of demand and the flexibility of our vertically integrated model. At the end of June, we had 382 homes either under construction or completed but not yet settled. This was up 27% from December. This reflects our deliberate decision to accelerate production in response to increased demand for our homes.
Despite the increase in construction activity, we had only 10 completed homes available for sale across the entire portfolio, highlighting that demand continues to outpace supply. GemLife Moreton Bay is a very strong case study to illustrate this. Last year, a buyer looking to inspect that site was required to wait three weeks simply because of the elevated demand. To address this, we doubled our construction output and expanded our sales team, which allowed us to more than double our monthly inspections. The result was 71 settlements in the half, compared to 88 settlements over the whole of FY 2025. This is a 61% increase in our settlement velocity to almost 12 per month, which is a group record. We did this while also increasing the average sales price by more than AUD 30,000 half on half. For us, expanding inventory is not just a capital management consideration.
It is a deliberate strategy to convert a growing sales pipeline into future settlements. Finally, turning to the balance sheet on slide 15, we have maintained a strong financial position while materially increasing development activity across the portfolio. Gearing was 32.3%, which is in line with our expectations given the accelerated rollout of new communities to meet the incoming demand. As settlements commence at these new communities, we will use incoming home sale proceeds to fund development activity at these sites. While we do expect gearing to increase slightly over the next year, we still expect this to stay within our target gearing range. To summarize our financial performance over the first year as a listed entity, we have delivered strong earnings growth, maintained margins, expanded our recurring rental income base, and preserved balance sheet strength while accelerating growth across the portfolio.
With that, I'll hand back to Adrian to take you through the portfolio and the growth ahead.
Thank you, Ashmit. I'll now provide a brief update on the portfolio and the development activity across the group. Turning to the portfolio, the observation we wish to highlight is the breadth of activity now underway across the group. Our footprint spans four states, being Queensland, New South Wales, Victoria, and South Australia, and includes completed communities, active developments, and future pipeline, giving us multiple sources of settlement growth as we continue to scale. While we remain active assessing new organic growth opportunities that align with our strict development margin profile requirements, we continue to exercise prudent capital management to ensure that our aspirational growth objectives can be strategically timed and responsibly funded. We will now shift our focus to slides 18 to 19, which highlight the communities and development approvals that are driving near-term production and settlements.
On slide 18, the development activity is progressing across a significant portion of the portfolio. We have recently received development approvals across several communities, while civil and earthworks activity is underway at Beachmere, Currumbin Waters, and New Gisborne. Residential construction is now active across 13 communities. The breadth and scale of activity is important because it reduces our reliance on any single project and creates a broader settlement runway as additional communities move into production. This uninhibited runway of activity, as Ashmit and I have previously referenced, is now crystallizing GemLife's ambition to deliver more homes to a broader cohort of customers in a range of new and undersupplied catchments. On slide 19, we are also progressing with the delivery of major central and communal facilities across multiple locations, which will further underpin the settlement run rate at those respective communities.
From a settlements perspective, Elimbah achieved its first settlements in June, and we expect five additional communities to commence settlements during second half 2026. Sales activity has also commenced across a number of recently launched communities, including New Gisborne, where demand for the first stage has been particularly encouraging. We are moving from a period where earnings were concentrated in a smaller group of maturing communities to a much broader operating base, exclusively executed by GemLife's vertically integrated operating platform, driven by people, purpose, and place. The highlights shared with you on slides 18 and 19 should provide for greater visibility into sales and settlement momentum leading into FY 2027 and beyond. Coupled with our demonstrated ability to deliver best-in-class product while operating within a multi-state environment, GemLife is poised for long-term growth, supported by business-led initiatives, which we will touch on shortly, favorable market trends, and compelling demographics.
Looking forward, GemLife's growth and outlook seeks to keep pace with a burgeoning cohort of Australian downsizers looking to age in place, live a socially connected lifestyle, and enjoy lived experiences supported by health and wellbeing. To keep pace with customer demand and ensure that the business continues to sustain a healthy building margin into the future, we are proud to announce the creation of GemForm Structures, a newly formed business unit positioned within the QA Build division of the group. GemForm Structures will be mandated to create factory-built manufactured homes exclusively for GemLife customers that will increase and complement existing home construction delivery methods whilst further enhancing GemLife's sector-leading vertically integrated operating platform.
As previously reported, we have already successfully trialed this construction methodology at GemLife Rainbow Beach in New South Wales, and subject to final investment scope and approvals, we believe the model has the potential to reduce build times, lower construction costs, and materially increase annual production capacity. The model also has the potential to broaden the range of locations and development opportunities while giving us greater control over costs, delivery, and margins through different economic cycles. We look forward to sharing further news regarding GemForm Structures in future market updates. Until then, we will continue to refine and improve upon the business case and execution strategy. In addition to solving for the need to increase home construction delivery, GemLife's Currumbin Waters development, Australia's first vertical land lease community, will see the land lease model introduced within an established catchment where broad acre land opportunities no longer exist.
Our multi-story structure is owned and operated by GemLife, will deliver approximately 215 three-bedroom independent manufactured Sky Homes across eight low-rise buildings, and will target premium home buyers offering high-end designs, elevated amenity, and urban integration. The patented modular construction removal and installation methodology strictly adheres to the statutory and regulatory requirements of each state and territory in Australia, and allows for the densification of scarce land more efficiently, while retaining the underlying economics and customer value proposition of a traditional GemLife community. Early site works have now commenced in earnest, and our sales activation is slated for 2027. First Sky Homes settlements will likely occur in 2028, along with the official opening of the community clubhouse and central facilities. Turning finally to the outlook and guidance.
A key strategic focus for the business is activating additional development-approved communities and building an increased yet sustainable settlement pipeline that provides visible earnings growth over the coming years. Six new communities are expected to commence settlements during 2026, with Elimbah already settling and another five scheduled to begin settlements in the second half. At 30 June, we had 382 homes completed or under construction, compared with 300 at the end of December 2025. We also had 292 homes under contract, together with expressions of interest over a further 78 homes, demonstrating continued depth of demand across the portfolio. As some of the newer communities commence settlements, we expect some moderation in average sale price during the second half due to the home product mix sold within those communities.
Given the strong performance in the first half and the sales and construction momentum we are seeing in the business, we have upgraded our FY 2026 underlying EPS guidance to AUD 0.30 - AUD 0.31 from our previous range of AUD 0.285 - AUD 0.30. This represents growth of approximately 27%-31% on pro forma FY 2025 underlying EPS. We enter the second half with strong demand, increasing production across the portfolio, and a significant development pipeline ahead of us. Our focus remains on disciplined execution, maintaining strong margins, and converting our pipeline into sustainable earnings growth. That now concludes the formal presentation. Ashmit and I are happy to take your questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Connor Eldridge with JPMorgan. Please go ahead.
Morning, Adrian, Ashmit. Thanks for your time. Can I just clarify, is the original 420 settlement target for FY 2026 still in place? If so, I suppose why, given you hit half of that target in the first half and then you'll have the benefit of five new communities settling in the second half?
Hey, Connor. Yeah, thanks for the question. The previous guidance we provided was over 420 homes for the year. Yeah, so that is still in place. We haven't updated that as of now.
Okay, thanks. Just on the average sale price, how much are you expecting that to moderate in the second half?
Yeah. I guess we specifically didn't go into too much detail, but as previously flagged, we still expect FY 2026 sales prices to be in line or greater than FY 2025 average sales price on a combined basis.
Thanks. Just one final one maybe for Adrian, just stated on construction costs up in Queensland. Just wondering how you're expecting that to impact group margins, just given there's obviously elevated activity up there.
Yeah. G'day, Connor. Look, very good question. I think in Queensland, we're going to see construction costs continue to rise anywhere from 4%-6%. I don't think we should be surprised if it's closer to 7% leading into the Olympics. This is why we've been very proactive in looking at alternative methods to construct homes en masse, and exclusively for ourselves as well, mind you. Look, at the moment, we are extremely comfortable with how we are approaching FY 2027 and how we are negotiating with our supplier and subbie network. To date, based on the results we've delivered today, it's business as usual for the GemLife Group. But certainly something that we continue to manage on a daily basis as we've previously discussed.
Great. Thanks, guys.
Thanks, Connor.
The next question comes from Solomon Zhang with UBS. Please go ahead.
Morning, Adrian, Ashmit. Thanks for your time. I mean, you did 208 settlements the first half, and then you changed in contracted homes around 90. So it implies that your first half settlement, so it was around 300 or 600 annualized. So that's well ahead of your prior settlement guidance range of 420. Is it a fair comment to say that production is the main bottleneck? Could you maybe just comment on where your annualized home production rates will get to in second half? Would you hit that sort of 500 level?
Thanks, Solomon. Yeah, good question. On the inventory page, we did give an idea of how many houses are under construction. That is about 382 homes. That is including the 73 completed homes as well. But in terms of, I guess, your question on sales, yeah. On a net basis, the net sales achieved would have been in sort of that 330 mark. But I think the critical part to remember is there are five new communities starting in the second half of this year. We may have some sales on that. We have construction actively going on that, but just because of there is always new with the first few stages. Some people are entering into the second street or, access to the site via the entry gates or sewer connection.
Yes, while construction activity has stepped up and sales activity has stepped up, at this point, until we sort of see the settlement run rates in all those new communities, we sort of didn't want to be too aggressive with what we are looking at in the second half of the year. So very happy with what we have come out with. But effectively, yeah, I guess the point is the numbers show that the construction activity has picked up. We can build more already. It is not really, I wouldn't say it is a bottleneck, and the sales pipeline is there as well. It is just getting that overlapped and crossing the sort of initial nuances with new sites under development and those early-stage settlements will, I guess, in my view, will have a good second half, but probably a stronger first half 2027.
Got you. And a quick clarify. Of the 292 contracted homes, which would be available for settlement in second half, noting they could slip into first half next year?
Yeah. Some of those are definitely kind of first half 2027 settlements. Having said that, there are probably some homes that we are building that are still could be sold and settled this year. So, I guess the 382 homes under construction are complete and the 370 settlements is not an exact overlap. So for example, of the 370, 34 Expressions of Interest are in New Gisborne. We haven't started home construction there, but that first slab is being poured in October. So, yes, to your point, that number are contracted homes, but some of them will definitely be first half 2027.
So-
Maybe just a final one for- Oh, go ahead.
So sorry Solomon, I was just going to add, just so you understand the nuance of how GemLife delivers the projects. For us, obviously, to get to a pretty solid run rate for settlements, part of our IP is to deliver as much of the site as possible. To essentially disarm any argument that the customer may have in relation to moving into a development site. There is heavy activity before we really start focusing on home construction itself. We have seen the fruits of that labor there, in Victoria at the New Gisborne project, as Ashmit correctly highlights. There are 34 contracts there, with the first slab due to go down in November. Those five projects that will start contributing to the settlement pipeline are undergoing significant capital investment, so that when we go into FY 2027, we are going to have some pretty strong visibility into a predictable run rate.
Very clear. Maybe just a final one for you, Adrian. Just on slide 21, the GemForm Structures. Appreciate that you are still working through the detail, but presumably this is clearly a NPV positive project. Do you have any rough parameters around rough CapEx and then your cost savings and build time savings that you might be willing to touch on on a high level?
Look, yeah. What we can say at the moment is we are working through the fundamentals of the factory setup. There are different iterations and phases for delivery of this factory. That is something we will probably go into granular detail at the full year results when we report on the numbers, but also this business unit itself. At the moment, I will probably decline to share too much of that detail, as we are still working through those numbers. What I can tell you, there is sufficient confidence within the group to be pressing ahead with this business unit. While we navigate what sort of phases we bring on earlier, or whether we sort of take a more conservative approach to what we are manufacturing, that is something that we will determine over the coming months and report to the market at full year.
Got it. Thank you.
The next question comes from Lauren Berry with Morgan Stanley. Please go ahead.
Hey. Good morning, guys. I was hoping you could give us a little bit of commentary on how your sales rates have trended over the last couple of months. I think, particularly since the budget came out in May. Also, if you can comment on what you are seeing in July and also into August.
So look, I will speak to the general commentary and Ashmit can give some more detail on the numbers. What I can tell you is since those federal budget announcements, GemLife has been extremely proactive in going out to the marketplace, particularly going into winter. Winter is always our, traditionally quite a month for this sector as people, we call them housekeeping months. What we have done over the last few months is gone out with different seminars, open day events, twilight events to ensure that this downsizing option, that is GemLife, still sits at front of mind of the customer.
I am pleased to say that when we look back on these housekeeping months, we have been averaging consistently over 2,000 inquiries per month, which is something that we reported on at the full-year results and leading into 2026, where significant inquiries have been evidenced across our existing portfolio and these newly released communities. But certainly as we go into spring, we envisage strong numbers and managing our inventory flow to ensure that the settlement pipeline can be stocked and indeed replenished for that matter, is something that we are focused on at the back end of this month and certainly into September.
Yeah. Lauren, I guess, yeah, just on a bit more data point, but what Adrian said is completely right. The inquiry levels are still exceptionally strong. Having over 2,000 a month is well more than what we need. We are still releasing stages in our disciplined approach, so there is no point signing up contracts for houses that are too far in advance anyways. Those were just locking in a price without knowing the cost. But effectively, no, I think I sort of touched on I got a question at the full year results 2025 call about where sales were at. We had a good Jan and Feb, but even since then, from Feb to June, the sales pipeline probably went from 300, 310 to 370. So it is still pretty, it jumps up a lot.
In July and August specifically, this total sales number is still at the same level it was in June. So what that means is whatever we are settling, we are replacing with sales. Again, we do not need to go too far in advance or too far ahead, but we are very happy with the pipeline we have given the 12-month outlook on settlements and construction.
Okay, great. Thank you for that. The second one, Ashmit, on the gearing. It has been increasing. You find it is probably going to go a bit higher. Any higher would be getting you close to the 35% upper end of your target range.
Yeah.
How comfortable are you sitting at 34%, 35% and how many more new projects can you, I guess, fund at this level without needing any additional capital sources?
Yeah. So, good question. So, very comfortable, short answer. Long answer is obviously in the second half of this year, with settlements activating in all those new projects, there is significant cash coming back in from those projects. That self-funds those projects effectively. We still have capacity to step up the construction across the other sites that we are looking at. So, this was all part of the, I guess, the IPO model funding. I got asked a question, I guess, internally, what did we expect the year to be at June? I opened the IPO model and it was something like 32.2%. So, I can wholeheartedly say this is where we expect it to be.
So, yes, it will go up and if we are at 34 point something for a bit, because I do expect it to sort of flat line for a bit as the projects start becoming a bit more self-funding. Keep in mind, whatever we are putting to the ground adds value as well. We are bringing forward settlements. Clubhouse is being completed as well. Discount rates coming down. It is typical for what that life cycle of evaluation and project goes through. But yeah, look, I do expect to sort of be pretty plateaued at that number before it starts aggressively coming back down when we sort of cross that CapEx hump, if you want to call it, and significant cash starts coming back into the business.
Great, thanks. Just last one from me. You've upgraded your guidance, but what do you see as the key driver of the change in the last six months, even though you haven't updated the official watch settlement guidance range? Can you just comment on how things have evolved?
Yeah, sure. I think obviously a strong first half. I think the settlement run rate in Moreton Bay has just been exceptionally strong. Just the level of sales and demand of the new projects as well. I think the average sales prices, I guess, for the first half and what we're achieving, still on a like-for-like basis, we're still seeing sales prices growth, irrespective of whatever's happening, I guess, with the budget or macro stuff. On the second half, there'll be with the new project starting on, being first stage and in sort of different areas. There's obviously that product mix element. We do expect that lower sales price in the second half. But overall, though, there's enough key drivers there to sort of well support that.
Really the only thing sort of holding us back is just seeing settlements at the new projects, at these five new projects and seeing what that settlement run rate will be. But that will give much more clarity into 2027 once we actually see that.
Lauren, just to add to that, what's giving us further confidence is just the level of inquiry and the quality of the inquiry that we're getting across those new projects. Obviously our established communities that are maturing are well understood and contributing significantly, but also these newly launched communities where sales are slowly starting to gain their own momentum, where we're cautiously confident that as we go into the back half of the year, that it will continue to be a consistent run rate for us and certainly turbocharge into FY 2027.
Great. Thanks, guys.
Thanks, Lauren.
The next question comes from Adam Calvetti with Bank of America. Please go ahead.
Hi, Adrian and Ashmit. Congrats on the result. Just your corporate costs are up on an annualized basis, about 50%. If you kind of run through consensus numbers, it would have been a much stronger result this half. Can you just comment on what-
The way I am looking at it now is obviously first half last year, we were not listed. If I look at half on half, it is more like a 20% increase over second half last year versus this half this year. Having said that, Adrian touched on a few corporate initiatives that we have done for the first half of the year with the GemLife brand update, the app rolling out as well. A lot of that is upfront. Obviously, being listed now, there are a few governance enhancements that we have done, updating risk management frameworks. We had a lot of firsts, I suppose, with our first AGM, first distribution, that comes with documentation and legal fees and tax fees to check advice. So there was definitely, I guess, what I would say a bit of a transition or that step up.
Moving forward, yeah, I definitely do not expect that level of growth. Obviously, as we grow and inflation and CPI and wage growth, then that will come in. But not at the level of growth of what we have seen for this half, I guess. It is still part of that transition phase right now.
Yeah. That is good.
Adam, Adrian here, just to add to that, obviously those corporate costs is, the QA Build division, because we are a self-performing business, there are a lot of different sort of programs that we are running through that QA Build division to ensure that we are sufficiently supplied with workforce across these locations in that multi-state environment that we referred to. So, a lot of that investment in people and culture, and in programs and in different sort of initiatives to attract the best quality workers, the best quality subbies and suppliers, that requires investment and consistent investment to make sure that we can go to the areas that we are going to, and delivering the GemLife product to the same quality and spec level, and maintaining those margins. That is what this business is about.
Be able to comment maybe on how much of that 50% uplift is in the QA Build division. Is that going to be an ongoing cost and will that eventually translate into the new product, or is it more R&D? How do we think about that coming in and out?
No, the QA Build costs are more in line with business as usual related costs when you're scaling to the level that we're intending on scaling to. As Ashmit said, majority of those corporate costs are one-offs or firsts. When we talk about governance and we talk about the other initiatives since becoming a listed entity, again, don't forget the fact that the first half of FY 2025, we were still a private company. We ran a lot leaner than what we're running today because there's simply more requirement to report and obviously we're scaling. There's 13 communities that are currently under construction that requires technological platforms to drive that margin growth for the business.
Yes. Adam, I might jump in here. When Adrian was talking about that scaling, a lot of that's on the technology side as well and that's software costs. Because that allows us to scale in a controlled way as well, but also on the training center. But that technology stuff, while some of that is ongoing, but it's really enhancing the team. A lot of it is established.
Okay. Let me just quickly, the outlook for the second half for those corporate costs.
Yeah, look, obviously, I guess, we do our wage increases in August. So a regular step up. We've already seen some of those kind of, external consultant stuff come down already compared to the run rate that we've seen in the first half. Look, I'm, yeah, appreciating the question, but there'll be a normal amount of growth, I suppose, is what we're saying.
Okay. Perfect. That's super clear. Then just on the conversion rate of your EOIs, you had 38 at December. How many of those converted into settlements? How do we think about the risk? Obviously, you've got 34 at New Gisborne settling, and I'm sure there's some more EOIs settling in calendar year 2027. We're in a falling market. I mean, how locked in are these customers?
Yeah. I'll let Adrian talk about maybe the market stuff. But, generally, we don't actually track the conversion data because, as we said, we release what we want to release, and then we sell pretty quickly, and we work through that. If somebody drops out, we just resell it at an updated pricing list. So typically, it's not something that we monitor or we're too concerned with at this point. I think, again, Adrian can touch on the demographics of the cohort and what he's seeing. But, look, on that point, obviously, there are people who look, they like or they put their deposit down, sometimes they change their mind, sometimes it's held. So there will be people who drop out, obviously. But on the EOIs, all that's required is AUD 1,000 deposit, and we refund that if they decide to drop out.
It is what it is. But I guess from a market perspective, Adrian can speak more.
Yeah. Look, Adam, I think it's important to appreciate where GemLife is an outlier to its listed peer group. Because we're a self-performing business and we take a disciplined approach to our staged releases, we're essentially, at the time of releasing of our stages, oversubscribed on our lots. So the part of the balancing act that we've managed to- date, and which is why we talk about eight consecutive years of margin preservation, is as a result of that ability to build what is in front of us, what we're capable of building without margin erosion by simply having to try and convince a customer to buy with us. So for us, whether it's a booming market or a declining market, we do not change our approach to staged releases.
We all remember the COVID boom where a lot of the peer group and indeed MPC developers were selling lots 200 to 300 at a time. Whereas GemLife continued to do its staged release process, doing 30- 40 at a time, where our banks were actually worried, thinking that we hadn't done sites compared to others. But what essentially happened was we were able to build our homes and still preserve the margins in those COVID times, and that's no different today. So for us, whilst we're getting 2,000 inquiries per month, we don't necessarily need it, as silly as that sounds, because we're still ensuring that we're doing 30 - 40 lot releases and preserving that margin against the backdrop of this rising cost of inflation.
Great. Thanks for the color and congrats on the result.
The next question comes from Andy MacFarlane with Bell Potter. Please go ahead.
Hi, Adrian, Ashmit. A couple of quick ones from me. Just in terms of the timing of the new launches for the second half, just interested in some color on the timing of those launches. Noting that some of them, I think you are expecting first settlements in the second half. So, just maybe what your underwriting there if so for those settlements.
Yeah. No, good question. Cotswold Hills and Kilcoy Greens are pretty close. Next couple of weeks, maybe. Then the other three, just assume kind of one per month, really, until we are getting to year-end. I think just stagger them is probably what we are underwriting at the moment.
The reason for that, Andy, is just because entry statements are going up. There is heavy landscaping works, external infrastructure works where we are upgrading services at a couple of those other sites. That is the only reason. We just do not want to have people at Christmas time living in a construction site where there is a lot of safety risks.
Yeah. No, understood. Just a final one. Just interested in what you are seeing in terms of the global land market, transaction-wise in terms of pricing and competition that is out there.
Yeah, look, it's a very good question. Look, I think we're starting to see people considering what to do with their broadacre development sites. I don't think there's any pain yet. I think that is still to come. When we look at what our listed peer group are doing and some of the noise in the media recently around Ingenia and others, there's certainly appetite from land lease operators to take advantage of these current market conditions. As far as land lease operators are concerned, and some of the evidence that I've seen to date, for land or per lot rates being paid for by some of our peer group, I still think it's very resilient. There's a lot of consolidation occurring for our sector. There's a recognition that this is very much a countercyclical business.
If you look at Stockland's results and Mirvac's results, some of their bright spots have come from land lease. It's no accident that this sector continues to drive strong results in a downward cycle. That's something that I've addressed in the past. Ingenia was born out of the GFC in 2012. Halcyon, before Stockland took it over, was in 2010. This business does its best bidding in a downward cycle.
Thanks, guys.
The next question comes from Suraj Nebhani with Citi. Please go ahead.
Thank you. Good morning, guys. Good result. Just a couple of quick ones for me. Just following up on, I guess, restocking firstly. How do you think about that going forward, Adrian? It feels like now is not a bad time to restock. Are you seeing land prices come off at all in any of the major states, and where would you be looking to buy?
Yeah, Suraj, good question. Look, at the moment, whilst we're heavily investing into our recently launched communities, we've taken a view that broadacre organic growth sites, anything medium to long-term dated, are certainly something that we have a keen eye on. I think we want to be careful to make sure that we're managing, so we still remain prudent with capital management. We've given a target range for debt. We don't want to blow ourselves up by overcommitting. So for the moment, whilst we remain active in all of the usual states, medium to long-dated contracts are certainly being considered. And certainly, there'll be some more news on some of those prospects in future market updates. But I think at the moment, we don't want to get carried away.
We have such a beautiful pipeline of 10,000 + homes to deliver, and I think whilst margin preservation is being constantly put under pressure by inflation, managing ourselves and our own inventory before looking for more, I think is going to be critical to the success of this business moving forward.
All right. The second one was just on debt costs. Ashmit, looking at that slide 15, the hedging profile, for second half, you've got average rate of 3.4%. Where do you see cost of debt heading? And what sort of margins are we seeing across the book, please?
Yeah. Our weighted average margin across our current banking is about 1.66%, + 40% of that is a broker movement fee. We had a decent amount of hedging coming off the IPO because we repaid a lot of debt, we were pretty high hedge rates. Typically, to be honest, our hedging policy is we like to be at that circa 50% of debt. I guess we're sort of, if you're neutral on where interest rates are heading, you should be 50% hedged effectively. That's the mentality that we've adopted because there is a bit of countercyclicality in the business. If inflation's high, then our site rents are increasing or we're seeing that in house prices. If you're too hedged, you may lose out on potential interest rate cuts.
I guess, look, we're without a crystal ball, I suppose. We sort of feel like where we're at is pretty up there. I think the messaging will be hawkish for a while. Unemployment data softened a bit, inflation data softened a bit. It will be where we're at for quite some time. The 30% hedges maybe want to be short answer.
Understand. Thanks for that. Just one final one again for Adrian, if that's okay. Just broader conditions. It feels like, looking at Queensland, things are starting to moderate, and probably rightfully so. We've had a very strong period. Fuel costs have gone up again in the recent weeks, diesel is up after the excise rebates came off from the government. How are you seeing the business more broadly? I guess in terms of my strong sense is there's embedded margin upside in the business. I'm just keen to understand if you can give us some color on that and whether this weakness we're starting to see in Queensland house pricing, does that start to impact negatively in any way?
Yeah, look, it's a very good question and something that I think about daily. I think, look, certainly Queensland, we're starting to see some of that heat come out of the market. There's still a lot of activity. There's still a lot of people needing to move to Queensland to deliver the infrastructure, both from a water, sewer, energy perspective, but also stadium and various other infrastructure leading into the Olympics. Look, for us, there is a lot of upside. We're not going to sit here and say that there isn't. The strength of our business is the ability for the customer to make a significant material capital gain, which is what's driving referrals to the business at almost 50%. We want our customers making money. We know we could be charging more for our homes.
When you look at the run rates at Moreton Bay and other sites, 12 per month is pretty impressive, but it is also telling you that you are priced reasonably well and the market can digest it. Also, we have always taken a very cautious view. Even in a booming market, we have to take a very cautious view as to what happens with cost. Look, there is no doubt that cost will continue to rise. For GemLife, rather than sitting back and expecting government to do things for us, which they simply won't. We need to be proactive, which is why GemForm Structures has been formed. Which is why we are constantly engaging with suppliers and subbies and paying weekly to ensure that we are getting the best possible rates. I think what will drive GemLife's success and cushion or hedge against future inflationary pressures is our pipeline.
Businesses want to be aligned with companies like GemLife, where they are guaranteed work, and there is historical evidence to suggest payment on time and predictability with house orders and timing of delivery. I think all of those factors, we need to ensure that we do not slip, and making sure that also security holders are conditioned to accept that GemLife is a reactionary business. We are a market-driven business. We do not crystal ball outcomes and sales and settlement runways. We try to feed off the data at the time and respond accordingly.
Understand. Thanks for that, Adrian. Appreciate it.
The next question comes from Mitchell Schinck with Barrenjoey. Please go ahead.
Hi, good morning, Adrian and Ashmit. Just quickly, on the 292 homes under contract, are you able to talk to the quantum that are making progress payments?
Yeah. No, good question. I will answer that in two ways. One thing that the GemLife Moreton Bay case study showed us is, if we waited for everybody to make progress payments, we probably would not be able to do it at that settlement run rate as what we achieved, being almost 12 a month versus last year was pretty much 7 point something a month. We have taken a view that, I guess, building some homes off our own balance sheets and working capital can really accelerate settlements. It is where we see the demand and the inquiries coming through, and we have enough data points to feel comfortable with that. But if I look backwards, I suppose that the 208 settlements that we have used at the first half and we saw, okay, how many paid progress payments? Just keep in mind, some people catch up.
We may start at home. It is at base stage. It is a frame stage. Somebody comes in and says, "Okay, actually, you know what? I am going unconditional. I will catch up progress payments. I will pay the first two stages and then pay for the rest later." I guess if we look backwards at the 208 we settled, 40% paid progress payments. It is still very good, I guess, because one person paying progress payments funds two houses effectively. But definitely where we see the data, where we have the ability, where we feel we weigh up our capital management consideration versus accelerating settlements. We will continue to monitor that and deploy the capital where we see fit.
No, that is a good color. Maybe on that strategic inventory push, are you looking to sort of roll this out portfolio-wide or is it more focused in the communities where you are seeing that strong resale interest, sort of Moreton Bay, Gold Coast focus?
No, it's across the portfolio. When we look at the performance of other communities, some communities will track at that traditional three per month, and that's fine. Some of those more conservative regions, out of metro areas will do that. Again, we will temper activity and look to focus more on marketing initiatives in those instances. But certainly where we need to lean in as a business and provide more inventory, we will do so. Again, that's something we're assessing right now as we head into the spring selling months. It's very much driven by inquiry, the quality of that inquiry, and market sentiment, which dictates what we do in each specific catchment. No catchment is the same, and that's the beauty about being a vertically integrated model because we can assess and execute accordingly.
The main data point that I would call out to drive that is, as at 30 June 2026, we only had 10 available complete homes across the entire portfolio. We're building at 13 active sites, and we only had 10 complete homes that doesn't have a name to it, that are genuinely for sale.
Do you see that, where do you see a stable rate of houses on hand, unsold and uncontracted?
Look, I think that inventory is going to be location-specific. I'd rather answer the question this way. Have we lost any buyers because we haven't had houses on the ground? The answer is no. Because of the way we are releasing our stages in that disciplined manner, capturing all the buyers that we need to fulfill that stage. It's not like we're releasing 200 lots within a 500-home community and expecting to have houses waiting for customers to rock up to the sales office. It's more about, can we oversubscribe a particular stage? What does margin look like for that particular stage? Is there an ability to deliver something that's more unique rather than a traditional bread-and-butter home? They're those types of considerations that we make when we're looking at inventory on the ground.
But one thing GemLife will never be, it won't be a company that will simply build out all these houses expecting customers to follow. Because if we were to move down that path, we would be concerned about margin erosion. And that then becomes a GemLife negative.
No, that's great. One final one from me, just from, obviously, average price growth's been strong, driven by the, obviously, Moreton Bay and Gold Coast carrying the weight over the half. What are you seeing on a like-for-like comparison with price growth over the last six months?
Yeah. Well, look, we gave a more specific case study. So half on half is average sales price of what settled in second half of FY 2025 and first half FY 2026 is AUD 32,000 higher, ex GST. Obviously, depending on the base that it started off, but they're about the range. Like for like is still up, like we're saying. It's just the second half forecasted drop is really due to product mix and location of the new communities.
Appreciate it. Congrats on the result.
Thanks, mate.
The next question comes from Monty Swift with Taylor Collison. Please go ahead.
Hi, Adrian, Ashmit. Quick one. It's early stages, I guess, at a number of the communities, but are resales clearing in a timeline and, I guess, price you and the homeowners selling would expect?
Yeah. At the moment, new home sales and resales are tracking along nicely. At the end of July, we had 227 resales across the group, with margins of 12.3% compounding. So that uplift that our customers have been enjoying upon their resale is still tracking into positive territory. Again, what does that tell us? That tells us no listed peer or unlisted peer is building enough homes to satisfy the demand that is coming through. We're extremely buoyed by that data and to see that capital growth that our customers are experiencing when they sell their home, which tells us that there is significant runway for our peer group to be doing more to deliver new homes. Paying for the privilege to buy an established home is what gives us the confidence when we look at these newly established or newly launched communities.
Based on the evidence to- date from inquiries and the quality of those inquiries, I think it's very much in line with what the business has experienced to date.
Great. Thank you. Just last one. You said you sort of doubled the construction workforce at Moreton Bay. Was this moving teams from elsewhere or increasing the overall construction workforce? I guess you're seeing any labor constraints on the six new communities coming on. Thank you.
Yeah. Very good question. It's an increase of the workforce. Not robbing them from other sites, but actually adding more people to the GemLife business and the QA Build brand. I guess that's something that we're extremely proud of. The QA Build business is a force within itself. It's got an impressive culture and safety record. Naturally, that attracts a certain caliber of experienced tradie to the business, and we've been extremely blessed, both from a white-collar QA Build and blue-collar QA Build perspective. We've attracted some quality people, which will play an integral part as we continue to scale up the business.
Thank you. Well done.
Thanks, Monty.
There are no further questions at this time. I will hand the call back to Mr. Adrian Puljich for closing remarks.
Before we close, I would like to thank the board for their continued support and guidance, along with the entire GemLife team for their hard work and commitment in delivering communities that speak to community, fun, and friendship. The strong results we have reported today and our vision for the future reflect the dedication of our people across the business in enhancing the lives and lifestyle of our homeowners. I would also like to thank our homeowners who remain at the heart of everything we do, and our security holders for their continued confidence in GemLife and for their support of our execution strategy. Again, we are very pleased with the first half, but importantly, we remain focused on what lies ahead. We have a significant development pipeline, strong demand across our communities, and a clear opportunity to continue scaling the business and delivering sustainable growth.
Thank you again for joining us today. Ashmit and I look forward to speaking with many of you over the coming weeks. We will now conclude the call.