I would now like to hand the conference over to Chris Meehan, CEO. Please go ahead.
Thank you. Good morning, everyone. Welcome to Winton's FY 24 annual results call. It's a pleasure to be here today, and we appreciate you taking the time to dial in. Alongside me, we have Jean McMahon, who's Winton's Chief Financial Officer. Today I will start off with a bit of a business update and then hand over to Jean for the financial overview. Then I will finish with the ESG outline and a few slides on the market and future outlook. We'll also take a few questions at the end, but investors and analysts can add themselves to the question queue at any time. So during FY 24, Winton's long-standing pre-sale strategy has served us well, and 345 units were settled, delivering NZD 173.6 million in revenue.
This is down 21.5% from the NZD 221.1 million of revenue in FY 2023, reflecting the prior year having been a significant year of delivery for residential development, as well as the current difficult market conditions. In a difficult market, however, we've maintained our development margin of in excess of 40%. Similar to the decline in a reported half-year FY 2024 results, earnings before interest, tax, depreciation, and amortization of NZD 29.5 million, and profit after tax of NZD 15.7 million, were down 69.1% from the NZD 95.6 million and 75.6% from the NZD 64.6 million, respectively.
As of June thirty, we had a land bank yield of approximately 6,000 units and cash holdings of NZD 41.7 million. 23 current projects across 12 master planned communities, and our pre-sale book currently sits at a healthy NZD 411.7 million. It's fair to say that this year's financial results don't fully capture the resilience and progress that the Winton team has delivered in FY 2024. Despite a difficult market and very challenging economic conditions, we've continued to settle pre-sold properties, complete new projects, and diversify our revenue streams. This steadfastness is a testament to our commitment and our ability to navigate the cyclical nature of the property market to our advantage. Some business highlights, we now have resource consents in place for all five Northbrook locations.
We continue to add to the pre-sale book to protect future revenues. We've opened Ayrburn to the public in December 2023 and had over 150,000 visitors there to date, and just recently held our first midwinter Christmas wonderland at Ayrburn, attracting very, very high visitation. We launched the sales at Northbrook Wanaka and Northbrook Arrowtown during the year, adding to Northbrook Wynyard Quarter that launched at the end of FY 2023. We won the Best in Category for Tourism and Leisure Property at the Property Council Awards, as well as an Excellence Award for the Heritage and Adaptive Reuses category. We've continued to make progress along our ESG journey, with a lot of focus this year being on meeting the XRB climate standards and disclosures, which we have also released today.
We've appointed Guy Fergusson to the Winton Board. Guy is a member of the Audit and Financial Risk Committee and the Nomination and Remuneration Committee. Guy has been a great addition to the board and brings vast experience in corporate finance and capital markets. Our land bank pipeline has an expected yield of approximately 6,000 units, including 872 retirement units. Revenue for FY 2024 from residential development was NZD 162.5 million, an EBITDA of NZD 45 million, attributable to the 345 units that were settled, made up of 158 units in the first half of the year, and 187 in the second half.
The main FY 2024 settlements included part of Stage 3 at Lakeside, Te Kauwhata, Stages 11 to 15 rather, at Beaches Matarangi, Launch Bay Townhouses at Hobsonville Point, Stages 3 to 6 at Northridge Cessnock in Australia, some land in Parnell, dwellings at River Terrace in Cromwell, and Northlake, Wanaka. We've settled Stage 17B, Northlake Apartments, some commercial units, and Stage 1 of the Alta Villa Townhouses. The product mix in FY 2024 was different compared to FY 2023, as it included a lot more built product. This has increased the average revenue per unit to NZD 470,000 in FY 2024, up from NZD 374,000 in FY 2023. As a result, the average cost of sales per unit has also increased.
We're pleased with this year's settlements, which reflect the success of Winton's long-term pre-sale strategy. A core part of Winton is unlocking land value for master-planned neighborhoods and development projects. In FY24, Winton continued the momentum with value-creating outcomes on a number of its projects. At Northlake, Wanaka, the private plan change for Stage 18 at Northlake was approved, increasing the yield of this stage by 24 lots from previous assumptions, providing a total yield in that stage of 125 lots. At Ayrburn, rezoning has been approved to enable 7 prestigious residential lots. Resource consent was also granted for Northbrook Arrowtown in November, including the adjacent hotel. It is a significant milestone in unlocking value for the overarching Ayrburn precinct master plan. Resource consent was also granted for Northbrook Launch Bay in September 2023.
Winton is continuing to progress the consents for the 56 hectares of property currently zoned Future Ayrburn at Sunfield in Papakura. At Northridge in Cessnock, stages one to six are now complete, and all available land lots are sold and settled. Resource consent is now underway for future stages seven and onwards. At Launch Bay Hobsonville Point, Winton's waterfront master plan neighborhood that has been many years in the making and has seen Winton deliver seven residential projects to date. Jimmy's Point is a high-end waterfront project with 30 apartments, and nearly 50% of those apartments are now presold. During FY 2024, construction progressed at pace, and now the internal fit-out is all but complete in the apartments, and landscaping works are nearing completion also.
This will be an exciting project to deliver in FY 25, and the Winton team looks forward to welcoming the new residents into the established and thriving Launch Bay community. At Northlake Wanaka, it's been a big year of delivery. The Northlake team is pleased with the high-quality product it has delivered to buyers. The land lots within stage seventeen B were completed in FY 24, and stage seventeen A will be completed and settled within first half FY 25. Designing and consenting works progressed on stage eighteen, and construction will commence during FY 24. The Northlake apartments and commercial units underneath them were completed and settled, with only two commercial units that remain, and the construction of the Alta Villa townhouses have been a significant undertaking and it's been great to share the premium finished product with potential buyers as they've been completed.
Of the 24 completed homes, only a handful now remain to be sold. The Beaches Matarangi development in Matarangi is now complete, and we look forward to marketing the final 20 lots or so over the summer period. Winton's delivery at Lakeside, Te Kauwhata has continued, following the completion of the village center in FY 2023. Stages three B and three C continue, with services, drainage, roading, and footpaths, and a tender for the stage four civil works is well underway. The Northbrook Lakes luxury way of living is starting to carve its niche in the retirement market. It demonstrates a unique offering not seen before in New Zealand, and it's evident it is attracting residents who have never contemplated a traditional retirement village as an option for their later living years and are drawn to the Northbrook five-star lifestyle.
During FY 2024, Winton opened display suites on two more sites, Northbrook Wanaka and Northbrook Arrowtown. These are now in addition to the Northbrook Wynyard Quarter display suite, which was opened in June 2023. All three villages are now registered under the Retirement Villages Act 2003. The pre-sales launched at Northbrook Wanaka in September 2023, along with the display suite, allowing potential residents to view two full-size residences, one a three-bedroom and one a two-bedroom. Northbrook Wanaka is part of Winton's established Northlake neighborhood, and once finished, it will have ninety-six Northbrook residences and thirty-two Northbrook care suites. A well-known and reputable contractor has been engaged to construct stage one of Northbrook Wanaka, consisting of 28 two- and three-bedroom residences, as well as the central facilities.
Construction is progressing quickly, and the contractor works towards a May 2025 completion, when the first Northbrook Wanaka residents will take occupation. The Northbrook Arrowtown display suite opened in late May 2024 , and pre-sales have commenced. The full-size two-bedroom apartment and sales office has an architectural model of the entire project and is located directly adjacent to the Ayrburn restaurant precinct. Northbrook Arrowtown will have one hundred and forty-two, one, two, and three-bedroom residences and 28 Northbrook care suites. Resource consent has been granted, and Winton has submitted a variation to this resource consent that includes some practical adjustments throughout. Civil works and landscaping continue on-site, and works for stage one buildings are expected to commence early in 2025 . At Northbrook Wynyard Quarter, early works and site preparation are now complete, and the main works contract negotiations are well progressed.
The continuance of the piling and basement construction was delayed from February 2024 due to industry-wide issues and the Auckland Council consenting processes, which has resulted in us making a tough but necessary decision to change the structural engineer for the project to the Robert Bird Group. Basement construction will commence in the first half of 2025, with practical completion remaining on schedule for FY 2028. A snapshot of the Northbrook portfolio, covering what I have discussed, is above. Our commercial activities include Winton's investment in properties such as our Lakeside Shopping Center and our Cracker Bay precinct, and the operating businesses at Ayrburn and Cracker Bay. Revenue for this segment includes rent and hospitality revenue. In FY 2024, commercial revenue was at NZD 11 million, up from NZD 3.7 million in FY 2023.
The Cracker Bay brand was launched in FY 24 and encompasses the Cracker Bay Drystack and Marina, the Cracker Bay offices, and eventually the Cracker Bay restaurant hospitality precinct. It's a core part of the wider master plan that complements the Northbrook Wynyard Quarter and the Village Precinct. The Cracker Bay Drystack and Marina are a prime location for convenient boat storage and launching. When Winton took over ownership of this facility, the drystack was in much need of a refurbishment to align with Winton's standard and vision for the area. Refurbishment of this drystack building is now complete, and the business has been reset to offer a best-in-class service. Renovation and refurbishment of the neighboring Cracker Bay office building have continued throughout the year and expected to complete in the first half of FY 25.
Once finished, it will offer premium waterfront facilities for office tenants across four levels and add to our rental income pool. The building is leasing up well. The vision for the hospitality precinct is exciting and includes multiple dining venues, private functions, facilities, and a members club. Good progress is being made on the resource consent for the remainder of the site. However, like Ayrburn, time has taken to get the design and the consenting right. Winton opened the first stage of Ayrburn to the public on Saturday, ninth of December, 2023, with five different venues to cater to different tastes and occasions. From sunny courtyard dining at the Woolshed, wine tastings in the Manure Room, sweet treats at the Dairy, cocktails at the Burr Bar, to a multitude of events and entertaining options in the Dell.
In February 24, the Barrel Room was added to the venue list, targeting private events and feast-style dining, with 56 wine aging barrels lining the walls and the grand piano as the centerpiece. Since opening Ayrburn, well over 150,000 people have visited, and that's been a diversified mix of visitors from all ages, demographics, and from all over the world. Locals, New Zealand residents, and visitors from Australia collectively make up the majority of visitors to date. Ayrburn has also held many events so far, including private functions and activations created by Ayrburn. More recently, Ayrburn held its inaugural Midwinter Christmas Wonderland, which attracted over 20,000 people during the month of July, and by all accounts, was a successful and well-loved initiative that will continue in the future years.
We're very happy with the traction of Ayrburn so far, but there's still a lot to do. The Ayrburn master plan has been designed to uplift the value of the neighboring Northbrook Arrowtown and Winton-owned residential land that forms part of the wider Ayrburn precinct. In FY 25 , Ayrburn will expand further with the opening of Billy's, the Bakehouse, RM's Butcher, and construction will start on Northbrook Arrowtown. I'll now hand over to Jean for the financial overview.
Morning, everyone, and thank you for joining us. As Chris mentioned, we are very pleased to report our results for FY 2024. Winton has delivered revenue of NZD 173.6 million in FY 2024, 21.5% down from NZD 221.1 million in FY 2023. A total of 340 units were settled, a decrease of 220 units. Cost of sales of NZD 103.3 million is slightly higher than FY 2023 by NZD 0.6 million. This is largely a result of the 12.7% increase in built product settled by volume in FY 2024, which has a higher cost per unit than land lot sales.
In FY 24, Winton opened Ayrburn and continued to generate annuity income from Lakeside Commercial and Cracker Bay, generating a total of NZD 11 million revenue for the period. A fair value loss of NZD 1.7 million results from the revaluation of commercial assets and retirement land within the investment properties portfolio. This compares to a gain of NZD 6.8 million in FY 23. The movement results from the timing of consents granted, the properties being revalued, and the original purchase price of the underlying land. Administrative expenses increased by NZD 11.3 million in FY 24 . Seven point five million of this is due to increased employee benefits, with an increased headcount in FY 24 to support Winton's growth and new operating businesses. Establishment costs of NZD 2.7 million were incurred in relation to the pre-opening of Ayrburn, and these include branding, marketing, recruitment, and employee training.
The remainder of the increase is due to the growth of Winton's operations and some inflationary pressures. Selling expenses were lower in FY 2024 by 26.7% due to reduced sales commission and marketing spend. The FY 2024 results in one-off non-cash deferred tax liability adjustment of NZD 2.9 million, arising from a change in tax legislation that came into effect this year and relates to the depreciation of buildings. This liability does not reflect taxation payable if the assets were sold. The resultant net profit after tax in FY 2024 is NZD 15.7 million, a reduction from NZD 64.6 million in the prior year.
An increase in property, plant, and equipment of NZD 39.3 million since FY 2023 represents significant investment in Ayrburn, while an increase of NZD 69.9 million in investment properties represents progress at Northbrook, Wanaka, and Wynyard Quarter, as well as the redevelopment of Cracker Bay. Winton entered an NZD 80 million debt facility to support Winton's growth plans in December 2023. The facility with Massachusetts Mutual Life Insurance Company is fully ring-fenced to the Lakeside development and provided an equity release to assist with the funding of the development of Northbrook villages. The additional limit will be used to fund Lakeside, while the proceeds of Lakeside settlements will fully extinguish the loan. As at 30 June 2024, the drawn-down balance was NZD 64.8 million. The other properties across the portfolio remain unencumbered, and we ended FY 2024 with NZD 41.7 million in cash reserves.
Receipts from customers reflect units settled. We did experience some defaults at a few of our communities in FY24. At Beaches, we had one default. At Northridge, we have had five lots default, following 12 lots in FY23. We have successfully resold all of these lots and realized 4% more than the original sales price, including the recovery of the deposit. At Northlake, we have had one land lot default. At 30 June 2024, we had 39 units of residual stock available for sale, and we have since sold nine of these units.
Thanks, Jean. Moving on to ESG, Winton has continued to make good progress on integrating ESG considerations into the business and, reporting on them. Earlier in FY 24, Winton's sustainability framework was approved by the management team and supported by the board. It's become central to our ongoing efforts, aligning what we do with the agreed commitments within that framework. The most significant ESG milestone was completing the internal process necessary to meet the requirements of the XRB climate standards and the subsequent disclosures. The process reflects a company-wide input, including the Winton board, management team, and business leaders. Alongside the annual report, we've disclosed two standalone documents, Winton's FY 24 climate-related disclosures and Winton's FY 24 GHG emissions inventory.
During the year, Winton also transitioned to a new assurance practitioner for its GHG inventory report, which now includes all emissions from construction and the operations of the growing business. From a governance and social perspective, we implemented new internal policies covering cybersecurity, data privacy, digital acquisition, and GHG inventory management. We also implemented a health and safety metric appropriate for the Winton business, and have disclosed this in our annual report for the first time. We've aligned our community donations and sponsorships with the sustainability framework to contribute to the communities that we operate in. In FY 24, we contributed approximately NZD 380,000 to benefit the community, and this has been through sponsorships, donations, and other community initiatives. While there is still much to do, we do appreciate external commentators noting our ongoing progress.
Turning to the market. The market, New Zealand housing remains difficult. We expect this to continue through FY 25. You can see from this slide that house sales are down, housing stock remains high, new consents for dwellings continue to fall, and while there is no accurate data, the number of building permits are likely to have significantly decreased. We can also see that ready-mix concrete volumes remain down, which is an indicator of construction activity generally, and insolvencies are up, with the construction sector making up the highest proportion of these insolvencies at 23%. The CoreLogic construction cost index reflects construction costs over time, and in the quarter ending June 30, 2024, the index reported its first decline in construction costs since Q4 2012.
It is our view that the residential market volumes will not materially increase until the unemployment rate in New Zealand has peaked and starts to decline. While the decrease in the OCR last week was a positive for the market, we remain cautious, as inflation is still high, interest rates are still elevated, unemployment has continued to increase, and housing affordability remains a significant issue. The property development is cyclical, and Winton's experience gives us confidence that we are playing the cycle as best we can and that we are well prepared to weather continued challenging conditions until it does turn around. It is our intention to take advantage of subdued construction pricing and commence some major projects at the bottom of the cycle so that we complete them at or near the top of the cycle.
We know that our balance sheet enables us to do this effectively, which is the opposite of what many other industry players tend to do. We know this won't be the case for other industry players or enticing time for new entrants to enter the industry. Our job is to continue to progress with discipline and set Winton up well for when the market becomes more buoyant. We remain cautious about the market conditions for the year ahead, and we'll continue to operate with discipline. There's a lot to look forward to, and we thank you for your continued support, and that brings our presentation to an end, but we're very happy to take any questions from anyone on the call.
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 then two. If you're using a speakerphone, please pick up the handset to ask your question. The first question today comes from Nicholas Hill, from Craigs Investment Partners. Please go ahead.
Hi there. Congratulations on the results and continuing to sell in the current market. I was just wondering if you'd be able to provide some more commentary as to what the industry-wide issues and consenting process for Northbrook, that led to the change in structural engineer, and has this sort of resulted in a change in expected completion timing?
Yeah, thanks, Nick. So essentially, there was a building in town, in Albert Street, that was constructed. The engineer on that project was also the engineer on our project. The project in Albert Street ran into some engineering difficulties, and the engineer on both jobs ended up in a stoush with Auckland Council. It was quite clear that that stoush wasn't going to be resolved anytime soon, and that Auckland Council had lost faith in that particular engineering company. So rather than sort of persevere with that particular engineering firm, who had, at that stage, completed the engineering design for Northbrook, we made what was a difficult decision to change engineers and start again, because we felt like we were gonna get caught in the crossfire and even further delayed by continuing with that particular engineer.
So we made a pretty tough call, I thought, to set aside the design that the previous engineer had done and embark on a whole new design with a new engineer. And that's led to some delays on site, and obviously, that design is now in front of Auckland Council for consenting, and we're waiting for that to pop out. But we're confident in the new engineer, as is Auckland Council, and we're seeing in the timeline of the overall project it was a good decision. But the current arrangements with the builder see practical completion delivered in late 2027, and so we're forecasting settlements in FY 2028.
Okay, thanks. That makes sense. Looking at the NZD 412 million pre-sales figure, I know that... Well, from my point of view, there were more Lakeside elements than I'd assumed. Would it be possible to give a breakdown as to how much of this NZD 411 million is for Lakeside, and how much is for Northbrook?
No, we're not gonna give pre-sale breakdowns by projects for a host of reasons, but we're offering up the overall number, but not a breakdown.
Okay. And for the Ayrburn Hospitality Precinct, I know that your employee benefit expense rose from NZD 9.9 million to NZD 17.4 million. Would it be possible to give an indication as to how much of the NZD 7.5 million dollar increase is attributable to Ayrburn, as well as sort of do the same for the NZD 11 million in commercial portfolio income? Like, how much is for Ayrburn and how much is for Cracker Bay?
No, again, we're running a division of the business which has operating businesses within it, and those two are Cracker Bay and Ayrburn, and we're happy to give you the total across both. We're not proposing to break those down. And again, for a host of reasons.
Okay
... including, you know, competitors' analysis and things, we just don't think it's prudent for the business as a whole.
Okay. Would you be able to provide any commentary as to how the leasing for Cracker Bay office is progressing?
It's going well. We're happy with progress. We're Winton are moving into the building in the first week of October. The floor above us is also leased, and we're well down the path with some other tenants for other tenancies within the building. But generally, we're happy, given that we haven't finished the refurbishment works yet and won't really finish those for the overall building till the very end of the year, the calendar year.
So just broadly speaking, you know, this hasn't reached practical completion, but you've still got a third of the floor plate left to lease, roughly speaking?
Four-part, yeah.
Yeah, fourth part. Thanks. And just last one from me. I noticed that the Lakeside facility was broadly level on the interim results. Just wondering, did the debt drawn down rise to a higher amount over the second half of the year before being partially extinguished by settlements? And if so, is that sort of NZD 64 million baseline level of drawn debt to expect from this facility?
Yeah, sorry, Nick. That's something that we haven't disclosed in terms of how the debt balance will track, but it's in line with settlements and development works on site.
Okay, thanks. That's all from me.
Thanks, Nick.
Thank you once again. To ask a question, please press star one on your phone. The next question comes from Rohan Koreman-Smit from Forsyth Barr. Please go ahead.
Hi, guys, congratulations on continued progress.
Thank you.
I'm just asking another question around the admin cost a different way. You know, if you look at the second half and you take off the establishment cost to Ayrburn, you know, it looks like it was kind of NZD 16-NZD 17 million, including share-based payments. Is that a reasonable half-year run rate going forward, or do you expect a bit more build in the second half with the other parts of Ayrburn opening?
I mean, there's more of Ayrburn opening, so you'd expect more revenue and more cost as we continue to widen the hospitality precinct down there. I think that's the best way I can answer that, Rowan.
Yeah. There is an element of head office costs associated with establishing the venues, and that part doesn't increase as you get additional venues, though. So I think that run rate, it won't be quite the same.
Yeah, I think the back office is sufficient to run all current and future venues at Ayrburn, so won't be growing from here.
Yeah.
The relative increase will be less.
Yes. Perfect. Now, that makes sense, and then just on the pre-sales book, I know you don't wanna split it by project, but you know, can you split it by Northbrook and Resi? You've given us that before, or or-
... No, sorry.
Okay. Can I just confirm that it is both Northbrook and residential pre-sales in there then?
It is, Rowan, yep.
Yep. Excellent. I noticed you had a Parnell land sale in there. I'm assuming that's the old service station or was it a garage that you purchased?
It is, yeah.
Yeah. Okay. So that means you're kind of looking at sites that you have within the portfolio that aren't necessarily core going forward to realize some cash. Are there further kind of opportunities like that, or was that a bit of a one-off?
I think that was a bit of an outlier, to be honest, Rohan. I think it was just a small project. We've made an offer. We didn't expect the offer to be accepted necessarily, and it was, and we thought we bought it well, and obviously we sold it well, so it was a good turnaround for us. But it was just a small project that was out of line with the general scale of things we do, and we just felt like it was more of a distraction than what it was, you know, potentially worth, given the offer we had on it. And it was just focus on the bigger projects which we're good at and leave the smaller projects to smaller players.
Perfect. And then also on sales rates, I see you've released a few more lots down in Wanaka, and it looks like the sales rates have picked up in some of the built form stuff.
Yep.
Have you actually... I know you're cautious, but has there actually been a noticeable turn in demand? You know, inquiries are up, conversions better, or is it just a, you know, you finally had some available stock to sell, which you kind of haven't had in the past?
Probably the latter.
Thank you. And, lastly, the MaxCap Fund, no comments on it here. Are there more interesting opportunities coming across your desk? You don't wanna buy a stake in a large residential construction business, that's supposedly on the market?
The answer to that one, I think you're inferring, is a positive no. But we are in due diligence on one project.
Perfect. Thank you. I'll let someone else have a go.
Yep. Thanks, Rohan.