Everybody, FY25 results presentation. With me this morning is Greg Wall , the Chairman of our Board of Directors. Greg's going to make a few comments shortly with respect to the strategic review that we announced back in May. Yes, earlier this year. I'll hand to Greg shortly. Before we get to that, we want to move straight to the results highlights. On the slide in front of you, for those of you that are doing it old school and with hard copies, I'm on page three. Net profit for FY25 of $58.5 million. A really strong performance. We guided the market back in February and gave a range of $50- $55 million. We upgraded that in April, $55- $58 million, and we've ended a little beyond the high end of that range, which is a really pleasing outcome.
Earnings per share likewise up 61%, a little bit more than operating profit because of the impact of the share buyback. Dividends, we have declared a final dividend of $0.05 per share with respect to FY25, which brings total dividends for the year to $0.0775. EBITDA margin, very pleasingly up to 24% from 21% last year. The key underlying driver of the increase in margin is price growth across the portfolio, which is terrific. Gearing, quite a step change in gearing, and we'll talk in a little bit more detail about that later. Gearing has come down from 34.8%- 27.5%. Quite a step change in gearing, driven by really strong operating cash flows, which, as I said, I'll get to shortly. In terms of volumes, the right-hand side of the picture, sales are up about 11% to 2,768. Settlements up about 9%, 2,642.
A really strong contracts on hand position at 30 June 2025 of $612 million. That number 12 months ago at June 2024 was $481 million. We move into FY26 with a really strong contracts on hand position, which obviously gives us a lot of confidence. A key metric for us internally is this land bank activation at 71%. To give that some context, that is the percentage of our land bank that sits within projects that have been launched and therefore projects that are up and away, developing, selling, settling, et cetera, and therefore contributing to both earnings and cash flow. Moving to page four, there is a lot of detail on this slide. What I'd like to do is just highlight a few matters, and this really sets out where we sit within the Australian residential sector.
I want to highlight how we're responding very directly to some very favorable macro conditions. We are experiencing, as a nation, very strong population growth, 1.7% nationally, fueled by overseas migration. There is a chronic housing shortage in the country, very constrained housing supply with 400,000 dwellings short, as we speak today. Governments of various descriptions, federal, state, et cetera, are trying to do lots of things to address the supply side issue, but that is a long and slow process for those policies to really have effect. Very, very low vacancy rates across rental portfolios in major capitals around the country. An environment for our customers, a favorable borrowing environment. I mean, our customers, we have seen real wage growth over the last couple of years. Interest rates are coming down, as we know.
There are still cost of living pressures, but inflation is easing, and governments do continue to provide stimulus and support for home ownership. For customers that might be out there looking to buy a lot, a block of land in a Peet project, that environment is improving. We're seeing strong appetite for capital to have exposure to the Australian residential sector. For us, that presents opportunity for capital partners to come and support us in taking advantage of the current market conditions. We are highly leveraged to these market conditions, and they rarely line up like we're seeing them at the moment. We're extremely well placed to benefit from all of these macro drivers that we think will persist for at least the medium term.
What I'd like to do now, as we move to slide number five, is just hand over to Greg, our Chairman of the Board of Directors, to make a few comments around our strategic review.
Thanks, Brett. Good morning all. As Brett said, we announced the strategic review in May this year. Peet comes into this review from a position of strength. We're in a solid financial position and delivered strong results, as Brett has just talked about, and have a favorable outlook for FY26. We thought it was an opportune time to proactively assess our strategic position to capitalize on the favorable market dynamics of the Australian residential sector. To assist us in this review, we have appointed Goldman Sachs, and they will lead the review to ensure an independent, expert analysis and a market-informed recommendation for this review. The review will cover the key aspects of Peet 's business to ensure that we're optimally positioned for future growth and value creation. The review is about strengthening our position, unlocking value, and preparing for future opportunities.
It ensures that Peet makes smart, informed decisions that drive value for shareholders. The work is already underway, and we look forward to updating shareholders on the progress of that review at the AGM later this year. Thanks, Brett.
Thanks, Greg. Let me keep moving. The next couple of slides are a reminder of the Peet business model and our strategy. We can move through these reasonably quickly. On page six, which is in front of you now, our strategic pillars—masterplanned communities, townhouses, and low-rise apartments—remain unchanged. We do have geographic diversity across the portfolio that allows us to leverage off state-based fluctuations. As we've seen in the year just ended, notwithstanding markets in Victoria and the Canberra region, we've still delivered very, very strong financial outcomes. We have a very low cost base across the portfolio, and internally, we have great capability, great experience to execute across those markets. Moving to slide seven, overlaying those strategic pillars across our land bank, we have a very significant land bank, almost 31,000 lots, low cost base, as I said, end value of over $13 billion.
As you can see on that slide, the geographic spread across the various states within which we operate, and 43 projects. Just to refer back to the activation, of those total lots, 71% of them sit within projects that are active. That puts us in a great position to leverage the current market conditions. Slide eight, just to reflect briefly on some of the key strategic outcomes that were achieved in FY25. We continue to invest. A couple of new projects underway. We continue to expand. The Glendalough townhouse project in WA was launched. We've now sold through the first stage and moving into stage two. Forestville in Adelaide likewise, 71 townhouse project. Maintaining a focus on capital continues [audio distotion].
Hello, Brett, are you there? Hello, Brett, are you there? Ladies and gentlemen, we have lost the line for the management. Please stay online while we get them reconnected. Thank you. Ladies and gentlemen, the management has been reconnected. Thank you for staying online. Please go ahead, Brett.
Thanks, Alarak. Thank you, everybody, for your patience. My apologies for that. We are not sure how that happened, but these things are sent to test us. That's OK. Let's move forward. I'm now on page nine. I think I cut out a little bit through page eight, but let's just move to page nine, which is a picture that really shows what the company's been able to build over quite a period of time and position us so well for the markets, the favorable market conditions that we can see. This is 11 of over 40 projects on this page. These are the major dollar movers for us.
As you can see, if you look back five, even 10 years, the company was in a very different position than where we are today as we move forward into the next three, four, five years and beyond with such a high level of activation across major projects. This sets us up very, very well to respond to these positive market conditions that we think will be with us for at least the medium term. Page 10, let me move reasonably quickly through this. It is part of our DNA to deal with, and comply with, and outperform in some respects, ESG obligations. Just to point to a couple of things we're particularly proud of in the FY25 highlights side of that slide, the Golden Bay project here in Western Australia, Southern Corridor, achieved Best Master Plan Community Award from the Property Council.
That was a really great outcome for that team. There are lots of criteria that need to be met to achieve that outcome. We're really proud of that. It's also worth noting the Tonsley Village project. That's a project in Adelaide where we have been a key part of connecting over 500 homes to the embedded electrical network that is powered by solar panels. Again, an achievement we're very, very proud of. Let me move now to a little bit more detail with respect to the financial results. I'm just going to point to some key highlights.
The operating profit, you can see on that page, driven by a significant increase in revenue, $314.4- $437.3 million, generated largely by on-balance sheet development projects and an increase in funds management fee income, led to a very significant uplift in EBITDA, and therefore in operating profit, to $58.5 million, which I've already spoken to, which has given us the opportunity to have a material uplift in dividends. As I said earlier, a large part of that margin improvement has been driven by price increases across our various products and markets. Now turning to cash flow, and I'm on page 13 of the presentation.
Again, just to highlight the strength of the performance, a significant uplift in receipts from customers, a very high correlation of that number with revenue in the P&L, again driven by on-balance sheet projects and funds management income, giving us operating profit before operating cash flow, sorry, before acquisitions of $117.5 million, up from essentially break-even last year. We do need to spend the money before we make the money. There was a significant investment in FY24 creating the product that was then delivered in FY25. You know, capital recycling in action. Payments for land acquisitions at $5.8 million, the term payments. We made our last payment for the Flagstone project in FY24. You can see the $22 million dropping to $5.8 million. Now the only term payments remaining relate to the University of Canberra project. A very strong operating cash flow outcome.
Turning to balance sheet on page 14, just to point to a couple of key outcomes in the metrics on that page. Around the middle of the page, you can see net debt, net debt down from $316 million to $243.6 million. Over a $70 million reduction, which has led to a gearing outcome, as I said right up front, coming down from 34.8%- 27.8%, and putting us back into our preferred range of 20%- 30%. All of that, obviously, driven by those very strong operating cash flows. Weighted average debt maturity at 2.3 years because of the arrangements we've just struck with our banking syndicate, things that were literally signed off this week by the board. That debt maturity pushes out to three years.
Weighted average cost of debt has crept up 8.1%- 8.3%, and that is largely because the Peet notes are now a larger proportion, a higher proportion of total debt. As we've reduced debt, the weighted average cost of that debt has edged up, notwithstanding total debt has come down because of that dynamic. Moving to shareholder returns, pleasingly, on page 15, dividends in the top right-hand part of that slide, you can see the upward trend, FY24 being a cyclical low. For that, you can see the upward trend, and our expectation certainly is that the years ahead continue that upward trend. In terms of total shareholder returns, $232 million. Just to put that in context, that is almost 40% of today's net asset position of the company.
Having returned a very large proportion relative to the size of the business over that period of time, we think is pretty good. The buyback remains open. We have reduced shares on issue by around 4% since we started the buyback program. On average, we've paid $1.07 for those shares, so well below NTI and obviously very well below current market price. We have extended the buyback through to September next year. A little bit more detail on underlying operating activity. Where did we make our money? On this page, you can see EBITDA composition by both business type and geography. We have generated more profit from our balance sheet projects at 49%. That's the left-hand doughnut on that page. Last year, that was 47%. We're almost 50/50 balance sheet and funds being a combination of both JV and funds management.
We would expect to see the 49% creep into the low 50s in FY26. Geographic composition of our earnings, no surprise, WA and Queensland have accounted for 76% of EBITDA. Moving to volumes on page 18, again, no surprise in these metrics. You can see where we've delivered our sales volumes, 34% in Queensland, 39% in Western Australia. WA and Queensland have contributed 73% of sales, and about 69% of settlements. The other elements on this page that aren't possibly instantly obvious, and this reflects upside in our view for the business as we move forward. Sales in the ACT New South Wales were 6%. Last year, that number was zero. Last year being FY24, so we generated net zero. There's improvement in the Canberra market, which bodes well, gives us upside as we move forward. The Victorian sales at 10%, in FY24, they were 7%.
We are seeing a little bit of a tickle upwards in those Victorian sales, again, which we think bodes well for the short-term future. Page 19 sets out inquiry levels. They have levelled off as we expected they would. They remain above 10-year quarterly averages. There has been some normalizing across different markets as we expected, but we continue to have qualified waitlists in certain projects, particularly in Queensland and South Australia. What underpins our confidence as we move into FY26 is our contracts on hand. I'm on slide 20 now, and you can see, as I said earlier, we started the year, we started FY25 with $481 million of contracts on hand. We're going to launch into FY26 with $612 million worth of contracts on hand. As of yesterday, that had moved up by about 4% to $642 million. We are very well placed as we move into FY26.
As we conclude by just making a couple of comments about the outlook, we have seven new projects that will come on stream over the next two years. This supports the activation statistic I spoke about earlier. The higher the activation, the better placed we are to take advantage of the very favorable market conditions that we're in. In broad terms, those macro factors: overseas migration, population growth, the chronic housing shortage, the supply constraint, the activities that government are undertaking are good, but will take quite some time to have any effect. An improving position for our customers, labor market, labor conditions are good. Interest rates are going down. Across the various states in which we operate, Western Australia, South Australia, Queensland continue to be solid for us, and in some instances continue to deliver price increases.
We think we're just about off the bottom now in ACT, New South Wales, and Victoria, with some early signs of improvement. They set us up for growth as we move forward. In conclusion, we think we're very well positioned for FY26 with expectations that our earnings will grow and will continue to generate strong operating cash flows. That concludes the presentation. I'm not going to walk through the appendices, and I'm going to hand back to our moderator, and Greg and I will be happy to field any questions that you may have.
Thank you. If you wish to ask a question via the phones, you will need to press the star key followed by the number one on your telephone keypad. If you wish to ask a question via the webcast, please type your question into the Ask a Question box. We have a first question on the webcast from Mark Eaglesham. Is a potential outcome of the strategic review a sale of the company?
Thanks for that question. Look, Peet and our wider sector currently has exceptionally strong market fundamentals. As Brett mentioned, the housing shortage, population growth, housing policy, falling interest rates. The market is quite strong. The whole intent of this strategic review is to ensure that we have the right structure, the right access to funding, our asset base is well positioned to maximize the value of these conditions and to our shareholders. We're certainly not shopping the company around, but at the same time, we wouldn't speculate on any possible transactions or any outcome of the strategic review. We keep an open mind, and pending the outcomes of that strategic review.
Thank you. We have a next question from the webcast from Murray Palmer. When do you expect to get the results of the strategic review?
Thank you again. We are well underway with the strategic review now, and we hope to be able to make a presentation at the AGM, which is scheduled for later in November, of the outcome of that strategic review.
Thank you. We have three questions from Gavin Allen from webcast. The first one is, cash generation in second half was an absolute highlight. How do we think of 2026? Still harvesting or need to meaningfully reinvest or ramp up development?
Thanks, Gavin. I'll take that question. Yes, we had very, very strong cash flows second half FY25. That's correct. Driven by balance sheet projects, which included quite a bit of medium density townhouse product that settled in second half. We do need to spend money to deliver into settlements. We have a big build program to deliver into those residential lots under contract. We have a large amount of work being done as we speak at Flagstone. We have the prospect of activating our Aston project in Victoria, subject to our view on market conditions in the months ahead. There will be, we will continue to have strong cash flows, but there will be a balance to make sure we are investing in our product to sustain ongoing settlements.
Thank you. His second question is, any color on the University of Canberra in terms of inquiry and timing?
Yes, University of Canberra is proceeding really well. As I indicated, we now have approval, the environmental approvals locked away. We have submitted a development application. There is quite a bit of work to be done on the site from a civils point of view and putting in some initial infrastructure that's required before we move forward. At this point in time, we would see first sales happening in FY28. Some prospect of it happening earlier than that, but conservatively, we think it's FY28.
Thank you. Gavin's third question is about the sales activity in Victoria and Australian capital territory. How compared to this time last year and also compared to previous peaks?
Yep, good question. Victoria, we are seeing improvement in Victoria in our projects. Overall rates are slowing. Rebates in pricing is coming out of the market. There is less of it. In Victoria specifically, we had 7% of last year's sales in Victoria, 10% this year. We had around a 50% increase in sales volumes in Victoria year on year, understanding, of course, FY24 was a low point. We are seeing activity across our active projects, so we're encouraged by that.
ACT, again, we've gone from no net sales in FY24 to, in absolute numbers, perspectives around 70- 80 sales in FY2025. At its peak, and this is an outlier, at its peak, the Googong project sold over 400 in a year. We're well off the peak, but that is a bit of an aberration. We would see that project in particular normalizing to in the order of 200- 250 sales per annum over the next couple of years, subject to those markets continuing to improve.
Thank you. We got a question from Patrick Teodoroski from the webcast. Could you please provide some guidance on operating cash flow for FY26? You have stated most projects are in the mature state, and you delivered free cash flow well ahead of profit for FY25. Could we expect you to generate free cash flow ahead of profits again for FY26?
Yeah, thanks, Patrick, for the question. The operating cash flows in FY26 will be impacted by spend that we need to undertake to deliver into the large volume of contracts on hand. It is, in a particular financial year, heavily dependent on timing of when the settlements occur. We had a very, very strong second half, as has been indicated, a particularly strong last quarter even in FY25 from a cash flow perspective. Depending on the timing of those settlements, either side of, say, June 30, 2026, obviously that's going to impact the periodisation of those operating cash flows.
At this point in time, our view is they will continue to be strong. It's a little bit difficult to be more specific than that today, given the development program we have, and the likelihood again that we will have, you know, a bias in that, particularly in that last quarter. They will be strong. Will they be $100+ million, as they were in FY25? We'll need to work through that. They will continue to be strong.
Thank you. We got our next question on the webcast from Mark Eaglesham. What % of current pre-sales would you expect to settle in FY26?
Thanks, Mark, for the question. We would typically expect most of a very high % of the lots that are currently under contract to settle in FY26. We try not to sell more than 12 months ahead of title. If we've sold something at 30 June 2025, we'd expect to have received the title by 30 June 2026. We would expect a very high proportion of those lots under contract to settle in FY26.
Thank you. There are no further questions at this time. I'd like to hand the conference back to Mr. Fullarton.
Thanks, Alarak. Thank you all for tuning in. My apologies for the little break in transmission. I'm told it was not on our side, which brings some cold comfort. Anyway, it is what it is. Thank you very much for dialing in. I look forward to seeing some of you in the weeks ahead. It has been a great year. We are well placed, as I said, to deliver in markets that are very, very supportive at the moment and markets that we see remaining supportive into the medium term. Thank you again. I look forward to speaking with many of you soon. Thanks.
That does conclude our conference for today. Thank you for participating. You may now disconnect.