Good morning, and thank you all for attending. I'm pleased to be presenting my second result as CEO of Ingenia Communities, including the substantial progress made on the strategy and goals I outlined at our August result. Before we get underway, allow me to introduce some of our executive team who are joining me to present and also to answer questions: Justin Mitchell, our CFO, Donna Byrne, General Manager of Investor Relations and Sustainability, Justin Blumfield, EGM Residential Communities, Matt Young, EGM Tourism, and Michael Rabey, EGM Acquisitions and Development. I'm going to start on slide five. The implementation and systematic execution of our strategy supported our strong first half results and our January announcement of an upgrade to FY25 guidance.
The momentum we built over FY24 in enacting and embracing change has continued, and we are seeing tangible benefits emerging, with improvements in our EBIT margins and settlement volumes combined with sustained cost savings contributing to our FY25 outlook. We have also continued to embed more effective financial discipline and a laser focus on execution, productivity, and accountability, giving us greater visibility and confidence in second half earnings. Before we talk about the result in more detail, let me quickly recap on the areas of focus we identified back in August to drive our performance. These three areas of priority from a strategy perspective guide our actions to optimize financial returns and accelerate growth. They are shown on Slide 6. Firstly, simplifying the business. Secondly, improving development returns in line with targets. Finally, aligned to these objectives is building an unrelenting focus on operational efficiency and productivity.
Being clear on the attributes and returns we need from our portfolios, reducing costs, and finding more efficient ways to do what we do are key to value creation and improved returns across our entire portfolio. I'm pleased to report that we have made significant progress in each of these areas, and importantly, that the early benefits are translating to accelerated delivery of our year one goals and strategic objectives. These priorities guide the implementation of our one, three, and five-year plan and progress towards our financial and strategic goals as we execute our strategy and transition toward a more efficient and sustainable operating model with a stable cost base, greater development focus, and diversity of cash flows. Turning now to Slide 7, I'm extremely pleased with the team's progress on the year one plan and the actions that will underpin delivery of our year three and five objectives.
Since August, we have built on the conviction and progress already made and, importantly, have embedded these changes while building on this momentum and delivering a leaner, more productive business with a streamlined organizational structure and ongoing efficiency gains. We are well on the way to completing our transition from an aggregator to a creator and operator, with notable improvements in returns emerging. Firstly, we have simplified our structure and operations in line with a refined focus. We've completed the divestment of five assets from our subscale funds management business, paving the way for a full exit this year. Our teams have embraced a new purpose and values which are driving a genuine customer-centric culture. Our refined organizational structure is fit for purpose, with clear lines of accountability providing productivity gains.
In addition to reducing our executive headcount, we have implemented broader changes, including in our development and holidays business, which are also delivering efficiency and productivity gains. This has contributed to an increase in forecast annualized savings. Our process of board renewal is also complete and has resulted in some changes to our governance structure to support a refined focus and strategic direction. Considerable changes occurred in development, a key driver of accelerated growth and improved returns. We are already seeing the benefits of some of these changes, which include structure and resourcing changes as we move to an integrated delivery model with the core activities of acquisitions, marketing, and sales now within the development function. This is an important step in creating greater customer focus, alignment, and accountability through vertical integration.
Following the review of our pipeline and establishment of greater financial oversight, we now have a disciplined investment process and a laser focus on delivery of targeted returns. Deferring some projects as we explore potential pathways has been one outcome of this process. Pleasingly, we've been able to maintain our development gross margin as cost-based initiatives begin to impact, and our net margin is improving. Although we are yet to deliver the full benefit of some of these changes, they are on track to contribute further in line with our three-year goals. We have more work to do to refine our delivery model. We have made good progress in delivering growth in both settlements and EBIT margin. More broadly, we are making progress on our objective to deliver operational efficiency and targeted returns.
Each of our businesses has clear financial goals that are aligned to strategy execution and will be reflected in remuneration outcomes. These initiatives have supported growth in EBIT margin for our development, lifestyle rentals, and garden segments this half. We continue to release capital from lower growth assets as needed, and in the land lease space in particular, we have a range of active discussions aimed at supporting future growth through potential partnering. Combined, these actions are delivering progress towards our target portfolio structure and returns. Development has increased to 41% of portfolio EBIT, and we continue to deploy the majority of our capital in this segment, supporting ongoing EBIT growth, pipeline acceleration, and scale. This will support our five-year settlements CAGR of 10%-15%. We remain comfortably within our LVR and hedging targets, underpinning our capacity to fund further development growth.
We are well placed and on track to deliver on our strategy and medium-term goals with high conviction. Moving briefly to slide eight. As we move into year three, we expect gains from our actions to accelerate, in particular through the refinement of our designs and procurement in development. Optimized project returns will begin to flow through our future pipeline. Delivery of scale, greater efficiency in development, and optimizing returns across the business will continue the pathway to our medium-term targets and strategic goals, which we anticipate delivering from year five. Over to Justin to present our financial results.
Thanks, John, and good morning, everyone, and thank you for joining the call. I'll jump straight in with the key financial highlights on Page 11. Pleasingly, the group has achieved good momentum across all of our operating businesses, delivering strong underlying performance for the first half. This was underpinned by a 21% increase in revenue, with positive contributions from our diverse revenue streams. Lifestyle rental revenue increased almost 10%, driven by CPI-linked rent increases, organic investment, and new annuity income from homes settled during the period. Lifestyle Development contributed to significantly higher revenue, up over 50% as a result of settling 199 homes on our balance sheet, an increase of 39%. Holidays achieved a 4% uplift in revenue, with tourism income increasing 7% on a like-for-like basis. This momentum, now delivered over several periods, continues to drive enhanced value across the portfolio.
Revenue growth, together with stable development margins and a continued focus on cost management, has delivered a 48% increase in EBIT. As communicated, the group's effective tax rate was lower due to the revision of the amortization rate used for project infrastructure costs. As a consequence of these drivers, underlying profit for the half year was AUD 68.8 million, an uplift of 58%, delivering an underlying EPS of AUD 0.169 per security.
This strong start to the financial year, with sustained new home sales and settlements, coupled with stable development margins while embedding cost reductions, has provided confidence in the group's momentum, resulting in the upgrade to our FY25 Full-Year guidance in January. The group's NTA increased to AUD 3.85, and an interim distribution of AUD 0.052 per security has been declared, consistent with our prior period and in line with our distribution policy to pay out taxable earnings from the trust.
I will now turn to Slide 12 on divisional EBIT performance. We are seeing improving returns in line with our five-year plan, with EBIT growth and margin momentum across Lifestyle Rentals and development, highlighting the positive benefits of scale. This is despite an environment where costs continue to increase, including council rates and utilities. Lifestyle Rentals continue its growth trajectory, with EBIT up 14% and EBIT margin improvement as the portfolio grows. As mentioned, Lifestyle Development delivered significant growth in settlements across our geographically diverse pipeline, resulting in an EBIT uplift of 103% and a pleasing expansion of EBIT margin. The development joint venture contribution increased 148%, with 59 settlements achieved for the first half. Holidays has benefited from both occupancy and rate increases and the strategic investment in new holiday cabins, enhancing earning streams and maximizing portfolio value.
Segment EBIT increased. However, EBIT margin declined slightly, primarily as a result of some one-off costs and increased marketing expenditure. Confidence and support center growth has stabilized as we focus on efficiency and realize tangible cost savings from restructuring. These cost savings realized during the period were higher than originally anticipated, and we believe this now represents a sustainable cost base going forward. Turning to Slide 13, sorry, to provide an update on the group's capital position. The group has continued to be disciplined and maintained a prudent balance sheet setting without any asset sales this financial period. We are actively managing risk as we grow the business with a focus on capital management, appropriate funding lines, and hedging profile. Headline gearing at 31 December was 29%, and our LVR was 34%, well within our target range, providing capacity to fund further investment.
In addition, the group has AUD 107 million of funding headroom, which, combined with the strong cash flows from our lifestyle rental and holidays, provides capacity for accelerated growth in development as required and incremental investment in rentals and holidays. We remain very well supported by our existing lenders, with the opportunity to introduce new participants over time. Turning to Slide 14 on our portfolio valuations. Overall, the group has seen positive net valuation uplifts across our portfolio for this half, supported by the continued presence of strong macroeconomic tailwinds across the sectors in which Ingenia operates. Lifestyle rental increased AUD 66.8 million, including Capex spend, and a net positive fair value movement of AUD 4.6 million. We have seen marginal movements in Cap Rates across our land lease and all age rental assets.
The holidays and mixed-use portfolio increased AUD 39.6 million due to the continued strong underlying performance, investment in 43 new cabins, and a marginal decline in cap rates across this segment. It was pleasing to see Ingenia Gardens' cap rate remaining stable, highlighting the quality of the sector's underlying cash flows, attractive risk-adjusted returns, and the irreplaceable nature of these assets. As provided at the full year, additional information on our development metrics and components of fair value movements in land lease portfolio has been included in the appendices. This highlights a favorable improvement in net margins and net cash outcomes per lot. In wrapping up, our business remains resilient, providing a diverse asset base and development pipeline with all segments delivering positive momentum.
The group continues to maintain a prudent capital position, ensuring sufficient capital to invest in the group's development pipeline and managing capital allocation in line with targeted returns and strategic objectives. Ensuring that we continue to embed strong financial discipline across the business and de-risk our development pipeline to enhance future returns following a period of significant change across our operating platform remains our key priority. I will now hand over to Michael to discuss the results for the development division.
Thanks, Justin. I'll start on Slide 20, and good morning, everyone. It's great to be reporting on our development and acquisitions activity today. The results achieved reflect our ongoing focus on execution and the impact of enhancements made to our delivery model. Our EBIT contribution grew materially, and more importantly, we have delivered an increase in our EBIT margin, up more than 8% to 33.8%. Key drivers of this outcome were the 47% increase in overall settlements, an improved settlements mix, and additional joint venture activity. With the first settlements from the large-scale Archers Run project at Morisset, the JV now has four projects actively delivering settlements and contributing development and sales fees. We have seen our average home sale price increase, and our gross margin is within our targeted range.
Optimizing returns remains a key focus, and there have been some early gains that have assisted us in stabilizing margins despite cost pressures. The full impact of design, cost, construction, and procurement initiatives we are implementing will progressively improve returns as outlined in the five-year plan. We are beginning to trade out of some of our longer dated projects where these improvements are limited but are already seeing the benefits from our refined structure and greater financial discipline as future projects commence, and we continue to drive towards greater scale and efficiency. Also contributing to both current and future improvements is a more targeted, refined, and efficient strategic marketing approach, which has led to a deeper understanding of our customers and more effective and efficient marketing execution. Now moving on to Slide 21.
The joint venture settled 59 homes in the half with an average sales price of AUD 825,000, which is above our portfolio average due to the majority of these projects being in New South Wales. Our flagship Archers Run project at Morisset began contributing to settlements in November. It will make a more significant contribution as it moves into steady delivery in the second half. Now moving on to slide 22. We are also maintaining our construction activity to meet demand, completing a total of 217 homes in the half. We have 15 projects underway and stable build time supporting a more consistent production profile this year. Across the Ingenia-owned projects, we closed the half of 65 completed homes as inventory. Year to date, we have settled 304 homes, including 70 through the joint venture.
We are continuing to see allocations to buyers as homes are released, supporting a smoother settlements profile this year. Now moving on to Slide 23. Sales rates continue to meet forecasts, and we are accelerating our projects with a continued emphasis on clear milestones. Our focus is on activity that supports current and future sales momentum and stable rental returns. We are achieving this through the commencement and delivery of key amenities such as the recent completion of clubhouses at Element in Fullerton Cove and Natura in Port Stephens, with others underway. The launch of new projects to the market, including our Springside project at Beveridge in Victoria. This 262-home development is Australia's first community to achieve a Green Star Homes Design rating for all home designs.
The completion of projects that move into the stabilized annuity rental income operational phase that Justin Blumfield will take us through shortly, and the preparation and commencement of new projects, extensions to existing communities, marketing launches, and amenity. These include the launch and commencement of Ingenia Lifestyle Kokomo at Hervey Bay and the commencement of extensions to Latitude One and Plantations, both award-winning communities in our existing portfolio. Now on to slide 24. Settlements continue across a diverse range of locations, product types, and price points. While we operate in a number of sub-markets, a large portion of our pipeline is in Queensland, a market which continues to deliver with strong sales and settlement rates. We have limited exposure to the slower Victorian market, which is tracking in line with forecasts, with the inquiry remaining favorable.
Over the half, we acquired two additional sites, both in Queensland, generally our strongest market. Our pipeline for new homes now sits at over 5,225 development sites, with over 3,600 sites having all approvals in place. With a clear focus on our return targets, we are continuing to expand our pipeline and are reviewing a range of new opportunities. Despite strong tailwinds supporting broader demands for our homes, in the short term, we have observed buyer hesitancy and an extended sales journey in line with general market conditions and a slower general residential market. We have made significant progress on delivering against our development targets this year and are on track to deliver the enhanced returns outlined in our five-year plan as we drive towards net margin improvement in year three.
Our key touchstone remains our customers, and the group is focused on how this influences and guides the execution of our strategy to align with their evolving needs. Now over to Justin Blumfield to take us through residential communities and our focus on building belonging for our customers.
Thanks, Michael, and good morning, everyone. Today, I'm pleased to present strong half-year results from our residential communities. These outcomes demonstrate the robust nature of our rental annuities and our team's focus on delivering high levels of customer satisfaction across our communities. I'll be starting on Slide 25 with the summary of the Ingenia Lifestyle rental segment, which achieved 14% EBIT growth for the half. This result was driven by a 10% uplift in revenue arising from annual rent increases from existing sites and the addition of new rent-producing sites. This solid revenue growth, combined with the cost measures we've implemented, resulted in our headline operating margin improving 190 basis points and our stabilized margin 310 basis points. I'll now cover more detail on the individual portfolios, starting with our land lease communities on Slide 26.
Our land lease footprint continued its expansion with 194 new homes added in the half, while average weekly rent increases of 4.2% were achieved across more than 1,700 existing homes. Our rental increases have declined in line with inflation, and this period was the first in which the new Queensland government rental growth cap, at the higher of CPI or 3.5%, impacted our increases. However, this had minimal impact on overall rental growth. We also continue to experience high demand for established homes, with 117 resales achieved in the half, contributing AUD 1.6 million in revenue. To support enhancements in our engagement with residents, we are trialing a new Ingenia Lifestyle app available on smartphones. This app is proving very effective at the six communities involved in the trial, with over 85% of residents utilizing it.
We plan to extend the use of this app across more communities in the months ahead. Moving now to our all-age rental portfolio on Slide 27. The structural undersupply of rental homes within our key markets in Melbourne and Brisbane has supported continued demand for this portfolio. Occupancy of 99% and strong average annual rent increases of 8.5% were achieved. Our focus on improving customer amenity continued with the renovation of two communal pool facilities in the half. These customer upgrades support the strength of our ongoing rental growth and occupancy levels. We continue to selectively deliver additional rental homes within this portfolio, with a further 100-plus sites remaining available in the pipeline for future delivery. Lastly, I'll turn to our Ingenia Gardens communities on Slide 28.
While the headline results of this portfolio were impacted by the divestment of six of our Western Australian communities in December 2023, on a like-for-like basis, the existing 19 communities performed strongly. Occupancy was consistently above 95%, and a 100 basis point improvement in the operating margin was delivered. Strong average rental growth of 6% was achieved, sorry, through a combination of pension-linked rent increases and higher incoming weekly rental rates.
Growth in our incoming rent is often supported by refurbishment works completed on older vacated units before reletting. The length of resident tenure for our gardens communities has grown now to just under four years. This tenure extends by 11 months on average for over 600 garden residents who are supported by our Ingenia Connect service. Our Ingenia Connect team assists our residents to maintain their independence and to foster healthy and active lifestyles. In closing, we are very pleased to have demonstrated discipline in our operational execution and in our customer focus of building belonging at all our residential communities. Thank you. Now over to Matt Young, our Executive General Manager of Tourism.
Thanks, Justin. Good morning. I'm pleased to share with you an update on our half-yearly results. I'll start on slide 31. Over the half, the portfolio continued its track record of growth in tourism revenue and EBIT. While EBIT increased, EBIT margin declined slightly, largely as a result of some one-off costs and increased marketing expenditure, including development of a new website. We delivered modest growth in occupancy and rate, continuing a trend of growth in these key metrics. I would also like to highlight actions over the half which align to our strategic focus, in particular emphasizing the simplification of our business, growth and densification efforts, and investments in revenue delivery systems. As John mentioned, we've simplified the business with the disposal of the subscale fund assets, which resulted in the sale of four holiday parks.
During this process, we acquired one of the parks where we see growth potential. This also contributed to operating efficiencies and reduction in headcount. Moving on to Slide 32. In July, we deployed AUD 5 million in capital growth, which included the addition of 43 new pieces of stock across 14 parks. 90% of this investment was completed in generating revenue before the September school holidays. As of January, revenue generated, including booked and future revenue, has exceeded AUD 1 million, with a forecast operating margin of 60%. This is averaged across the parks and exceeds our 14% yield target. We're also in the final stages of building a new website, with the launch expected in early March. The key deliverables are to improve the conversion rates and drive direct business, which will reduce commissions being paid to online travel agents.
I look forward to sharing the results of the full year. In conjunction with the new website, we've been trying AI-driven pricing tools, which allow for frequent price movement within the day that automatically update rates in the property management system. Trials have shown promising signs. Marketing campaign activity has also exceeded previous years, with one notable highlight being the summer campaign, which was up 33%. Looking ahead, we remain very optimistic about the outlook for several reasons. Strong tailwinds with forward bookings up 14% compared to the prior corresponding period, driven by continued strength in domestic travel. Rising international travel costs, fluctuations in the AUD exchange rate, and broader cost pressures make our offering even more attractive, providing affordability and the flexibility for shorter breaks. Stable 18% recurring income from annuals and permanent bills is a strong platform for tourism growth.
Our new website drives direct bookings, cuts distribution costs, and enhances revenue and guest experience. Our proven track record in deploying capital efficiently through densification efforts to deliver strong returns. We have a good pipeline of opportunity and are actively planning the addition of new accommodation across key parks. In closing, I'm excited about the opportunities ahead and look forward to sharing further completed actions at the full-year results announcement in line with our year-one targets. I'll now hand back to John.
Thanks, Matt. I'm going to close on Slide 34. Our focus on execution is yielding results. We met and exceeded guidance in FY24 and have increased our target for growth in FY25. Over the first half, we made solid progress on our strategic goals and have embedded changes that will provide longer-term benefits. We have refined our structure, right-sized our cost base, and have entrenched greater financial discipline across the group. We are continuing to focus on pivoting from an asset aggregator to an asset developer and operator through the accelerated execution of our development pipeline and are already seeing the benefits of our strategy in improving returns aligned to clear financial targets and strategic goals. Importantly, the actions we have taken are all aimed at delivering shareholder value and building capacity in the business to support our three and five-year goals.
We move into the second half with a clear pathway to enhanced returns, sufficient capital to fund growth, and a simplified business that will drive efficiency and productivity. While we are already seeing benefits emerging, we still have more work to do to reach our optimal delivery model and longer-term financial goals. Our focus remains on execution. However, the speed and efficiency with which we have implemented the initial phase of our five-year plan has given us greater confidence to look at broader opportunities to accelerate the expansion of our development activity and geographic footprint while unlocking capital through strategic partnerships. We have strong conviction in our strategy and our ability to deliver improved returns, and I look forward to giving a further update of our progress at the full-year result.
That concludes the formal presentation today, but before I go to questions, I'd like to thank the Ingenia team for their support and commitment this year and their openness to change. I'm pleased with the position the business is in and look forward to updating you on further progress. I'll now open the call to 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're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Solomon Jiang with JP Morgan. Please go ahead.
Morning, John. Hi John, Justin and team. Thanks for your time. Maybe just the first question on Appendix 1, page 37. Just wanted to drill into the improvement in the EBIT margins for the development segment, so up to close to 34%. And sort of putting aside COGS, employee, and all those other expenses were down half and half. Can you call out A, what specifically has driven that, and B, whether you think the margins are sustainable and to grow further from there?
Look, sometimes it's just composition. So some projects are producing better margins than others, but fundamentally, a more disciplined approach to design, some savings in our clubhouses that have been coming through the P&L. So it's a composition of a bunch of things driving better margins, and you'll see a continuation of that.
Solomon, maybe if I just add to that. It's Justin here. At an EBIT level, I think this is what we've been talking around scale. We've obviously delivered significantly more volume year on year, and we've kept our cost base relatively stable. So depending on the skew in the second half, noting that the joint venture will contribute more than the first, which is obviously not in that divisional EBIT, you might see a slight reduction on a full-year basis, but it really goes to this scale equation that we keep on talking about. And as we continue to grow momentum in that business, we would hope to see continued increases in the EBIT margin.
Great. And were there sort of any timing benefits from sales and marketing which would have flowed through into the first half?
Not really. No. No, you will see marketing going up a little bit as we then prepare for FY26 settlements and campaigns. It's really campaign-specific, but it's nothing dramatic, Solomon.
Yeah. Final question from me. There's been a little bit of speculation amongst the market of a potential tie-up between yourself and, I guess, your other listed landlords peers. It seems a little bit counter to the overall strategy of simplifying and focusing the business, but just wanted to, I guess, let you address that speculation. Is it an absolute no, or would you consider all investments at the right price?
I'm not going to comment on the speculation specifically, but I would say we've got a pretty compelling and strong five-year plan for accelerated growth and a great balance sheet in order to fund that, and I think, importantly, also, as we stipulated at the full-year results last year, the ability to sell down at a lower growth asset in order to take advantage of any opportunities as they arise in the market, so we're pretty confident. We've got a lot of support for that strategy, so we're not distracted.
Thanks, John. That's good.
Thank you. Your next question comes from Tom Bodor with UBS. Please go ahead.
Morning, team. I just was interested in your contracts on hand and deposits on hand of around 357. I think you talked to a slight second-half skew in settlements, which I suppose implies around 300 second-half settlements, which suggests that your sales into FY26 sitting here today are fairly minimal. I'd just be interested in a comment on how your sales rates have been progressing week to week and how you feel about 2026. I know you don't have any guidance, but just at this point.
No, we're pretty confident, and also, some of the sales you'll see at the moment will be FY26 sales, so we're allocating at the moment things that won't go into production until next year, so the second-half skew is going to be slight. It's nothing excessive. In terms of how we're progressing with sales at the moment, it's probably a mixed match. We're seeing good support across pretty well all our communities, especially the new ones we've launched, such as Morisset.
The broader market clearly slowing or has slowed in Victoria, but we're seeing some green shoots there and still progressing well. Look, we've got good product at the right price point with a simple buy-in and no-exit fee arrangement, so underlying demand is pretty good. We had a slow December and a slow January, but we're seeing activity picking up in March, which is fairly typical for us.
So, pretty confident. And obviously, in the past, we had production issues. We don't have any production concerns, so we'll bring product to the market or more product available for FY26 settlement. So at this stage, there's no reason to be overly cautious.
Out of the 357, do you know approximately how many contribute to 2026?
I would say not a great deal, but if you just consider there's a slight skew to the second half for this year, that's probably the best way to look at it. The others all fall into 2026.
Okay. Great. Thanks. And then just picking up on the margin point again, I guess you've got some things that are going to help the margins over three to five years more around the design piece. Although the margin was very strong in this period, is it reasonable to assume your margins can go up towards 40%?
Yeah. I mean, that's the trajectory we want. And if you can imagine that the design initiatives we've already put in place, whether that's in-house design, civil works, slabs, or clubhouses, all start coming through the P&L progressively over the next three years. And that's why we set a three-year target. The initiatives are well and truly embedded, but we are still delivering and settling houses from old designs. We are still delivering and settling houses that have got clubhouses that were designed and built a year ago under the old model.
So it'll take some time to come through the P&L. The other thing is, as you'll see, skews in joint venture settlements. I think we get to about 30% next year. Some of those projects have got better margins because of where they're located in New South Wales. So that'll skew the margin occasionally as well. But you'll see an ongoing improvement over that three-year period.
Great. Thanks very much.
Thanks, Tom.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from James Druce with CLSA. Please go ahead.
Yeah. Hi. Good morning, John and team. Just a question on the second-half skew for EPS. If you just double the first half at AUD 0.169, you're at AUD 0.338, and yet your guidance is the top end is AUD 0.30. I'm just wondering what the drags are in the second half that you're anticipating.
Yeah. It's Justin here, maybe if I take that question. A good one. There's a couple of things that I would highlight and a few things we've emphasized before. Settlements is a slight skew to the second half, but importantly, you've got to look at the mix between what is the head-leased stock and the joint venture. A majority or significantly more in the joint venture, which means we get a lower contribution from that contribution. So that's one factor. The second factor is that you will see higher costs in corporate and support, a second-half skew, albeit we're saving a little bit more than we previously indicated, but it's certainly more than just taking the first half and doubling it. That's one thing. As always, as we draw down more debt, hedges rolling off, you'll see our interest costs also increase in the second half.
And probably a significant additional driver this year is tax because of the one-off adjustment that we took in the first half that is obviously not replicated. So you'll see that effective tax rate increase more to the lower end of the 10% that we normally guide to. So they're probably the key drivers of that half and half split.
Okay. That's clear, and just on the project starts, I think you're looking at starting four new developments this year. Is that still on track?
Yeah. We're still on track. So no projects are sitting behind. And I think we've got something like 3,200 lots that are approved and in various stages of getting ready to fire up. Some of those are second stages that we've been able to acquire of existing projects where we like Lara, where we've acquired the next stage, and Plantations where we've acquired an adjoining block of land. And those are really efficient for us because we've got an existing customer base, but also we have existing infrastructure and management in place. So more of those if we can find them.
Yeah. Okay. And then maybe just on can we dig into the sales rates a little bit more? I know just going back on the onboard counts for sales, first half 2024 was around 250. You sort of did around 215 for this half. This is the sales rate, not settlements. Can you just comment on any sort of momentum that you're seeing per project or some sort of explanation for that softness?
There's not really any specific thing. It's a broad range of things across every single project that all culminates in a piece. As I said before, we saw a slight drop-off in weekly momentum in the December, January period. We've had slow sales, slower than expected sales down at Parkside, but then surprised to the upside on Lara, surprised to the upside on Morisset. It's a mix and match for us, but we expect hopefully a strong end of February and a strong March, which typically happens in the residential cycle in Australia. I think the only overlay I would put there is with the interest rate uncertainty and a federal election looming, that might not play out as planned, but we're not seeing any structural shift against the product or in the market generally.
Yeah. Okay. And one more from me. You're still targeting 1,600-2,000 lots over the next few years. I just didn't see that in the press.
We're still committing to that guidance we gave a couple of years back, but we won't be revolving forward guidance on that. We prefer to stick with the five-year plan and the 10%-15% compound annual growth.
Yeah. And just adding to that, I think it's fair to say with where we settled 2024, 2025, that we will come at the lower end of that 1,600-2,000.
Okay. That's good. Thank you.
Thank you. Your next question comes from Ben Brayshaw with Barrenjoey. Please go ahead.
Good morning, John. I was just wondering, could you just, I guess, put some color around the calendar year-to-date sales, noting settlements have come in at around 46 lots? I'd just be interested as to whether sales have tracked in line or below settlements.
Let me see. So we had some carry-forward sales from last year where the customer settled in July, so there was a slight skew that occurred there, but not significant. But sales have generally tracked in line at the run rate that we required other than, as I said before, that sort of December, January bit. Does that answer your question?
Well, so my understanding is, just looking at your presentation material, that net sales for the half have come in below settlements. So, I mean, that has obviously been disclosed, but it would appear that way implied by the reduction in the number of contracts you're holding at period end. So hence my question around what the sales rates have been for this calendar year and whether that shortfall has continued.
No, the shortfall has not continued. I mean, if you look at our inventory balance, I think the year we were slightly higher, so we needed to clear stock, which we've been doing, but no sales are performing in line with expectations. There's nothing in that.
Okay. Terrific. And just a question on tax. Justin, I was wondering if you could just talk through the skew in the effective tax rate between the first and the second half and how you're thinking about the effective tax rate beyond FY25 in light of the new guidance?
Yeah. Thanks, Ben. So just maybe taking the second part is, and I think when we gave the guidance update, we'd assumed given the fact that the costs of infrastructure have escalated and therefore we will continue to amortize a higher rate compared to six months ago, that we would expect to see that effective rate beyond this year at the lower end of that 10%-15% range that we've previously provided. So assume that it's going to be closer to the 10% mark. So that's in relation to go forward.
Therefore, in relation to the second half, I think the full year will be probably just below given the fact that there is a significantly lower first half, probably around the 8%-9% effective rate for the full year, but not back to the normalized rate for the second half compared to the first half.
Yeah. Excellent. Thanks, guys. Appreciate it.
Thanks, Ben.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Carfi for closing remarks.
Terrific. Well, thank you all for your attendance and interest. Justin, Donna, and I look forward to meeting with many of you over the coming weeks and will be available for any additional questions you might have. So thanks once again for your attendance today. I will now close the call.