Winton Land Limited (WIN) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Winton Land Limited Full Year 2026 Interim Results. [Operator Instructions] I would now like to hand the conference over to Mr. Chris Meehan, Chief Executive Officer. Please go ahead.

Thank you. Good morning, and thank you for joining us today for Winton's FY '26 Interim Results Call. It's a pleasure to be here today, and we appreciate you taking the time to dial in. Alongside me, as always, today is Jean McMahon, who's Winton's Chief Financial Officer. Today, I'll start with the business update and then hand it over to Jean for the financial overview. I'll then finish with a few slides on the market and outlook. We will take questions at the end, but investors and analysts can connect themselves to the question time queue at any time. It's fair to say that the 6 months financial results don't fully capture the resilience and progress that the Winton team has delivered so far in FY '26. Economic conditions remain challenging. However, we have continued to settle presold properties, achieve solid new presales, launch new projects and diversify our revenue streams. Some of the business highlights for this period include completing the Northbrook Wanaka Wellness Spa, which opened this month and also commencing construction of Stage 2 at Northbrook Wanaka. Launching residential project at Northlake Stage 15F and North Ridge Stage 7, both of which have sold very well. We've completed the renovation and the refurbishment of the Cracker Bay offices. We've progressed the development of the Cracker Bay Hospitality with the first restaurant Bravo due to open next week, and we'll progress the Sunfield and Ayrburn Screen Hub fast track applications. Our land bank pipeline has an expected yield of about 5,750 units. Our revenue for first half '26 from residential development was $14.7 million, delivering an EBITDA loss of $1.0 million. This is due to settling 14 units compared to 90 units in the corresponding period. There's always a high degree of seasonality to our development activities. We undertake civil works and earthworks in the warmer and drier months and then complete and settle the units in the second half of our financial year. In first half ' 26, we also didn't complete any new build products such as apartments, dwellings or commercial units. Therefore, we saw less units settled in total over this period; however, we had an improved gross margin from 22% in the prior period to 35% in first half '26. We still have some significant residential projects on track to complete in second half '26, which we'll outline in the coming slides. On 10th of February 26, the expert panel issued a draft decision approving the Sunfield master planned community under the Fast Track Approvals Act of 2024. Winton is currently reviewing the draft decision and the draft conditions of this consent. Winton expects a final decision to be released over the coming weeks. We note that it is, of course, only a draft decision at this point. It will take some time to go through all the materials provided from the panel, and we'll have some more to say when the decision is final. Winton's proposed Ayrburn Screen Hub is also a fast-track project under the Fast Track Approvals Act of 2024. The Fast Track process is ongoing with a decision expected in April 2026. The facility will be located adjacent to the Ayrburn Hospitality precinct in the Northbrook, Arrowtown. Should the project receive consent, it will be a valuable part of the Ayrburn master plan and will generate significant recurring revenue from the screen hub and incremental revenue growth from the hospitality precinct. The Ayrburn Screen Hub is planned to be an all-inclusive film studio, enabling users to work and stay on site through filming, production and post production. It's accompanied by studio buildings, work rooms, office space for film departments as well as dressing rooms, screening rooms and meeting spaces. A 185-room accommodation facility for film workers is also planned, which will be available as visitor accommodation for when the films aren't in production. In the last 6 months, we continued the momentum on site of some of our larger neighborhoods. At Lakeside, the balance of Stage 4 works are complete with settlements Q4 '26. Works on Stage 5A are underway, and we also expect settlements for these in Q4 '26. Within the development, we've completed key community facilities, including reserve area, extending the walking and cycling network at Lakeside. We have also recently completed a new neighborhood playground. During the first half '26, we launched Ayr Residences, a premium subdivision within the Ayrburn precinct. Civil works continue on site with strong sales inquiry. At Northlake, we launched Stage 15F, which has sold strongly as well as selling the last lot of Stage 17. Works on Stage 18B and 18C are nearing completion and the sales rate there has been steady. We also launched a new Stage 7 at North Ridge Cessnock, where sales have been strong. We intend to get underway with these works on site in second half '26 with settlements expected in FY '27. The first stage in Northbrook Wanaka officially opened in May 2025 with the new residents continuing to move in and start the Northbrook lifestyle during first half '26. We've recently completed the Wellness Spa, a luxurious amenity featuring heated swimming pool, sauna, boutique fitness studio, hair salon and treatment rooms. It has been great to deliver such a premium amenity to our Northbrook residents and construction is now underway on the balance of Stage 2, which includes a cafe restaurant and 35 care suites designed to provide rest home, hospital level and dementia care. We're on track to complete these works in FY '27. Our commercial includes Winton's investment properties at Lakeside and Cracker Bay and the operating businesses at Ayrburn and Cracker Bay. Revenue for this segment includes rent and hospitality revenue. In first half '26, commercial revenue was $17.4 million, up from $10.4 million in first half '25. This represents a 67.4% increase. The renovation and refurbishment of the Cracker Bay office is now complete, offering premium waterfront facilities for tenants across 4 levels. The leasing has progressed well with 77.1% of Cracker Bay lettable area leased as at 31 December '25. Cracker Bay's first restaurant, Bravo is due to open next Friday and offers guests a vibrant dining atmosphere with uninterrupted water views. The Ayrburn Precinct has just completed its first 6 months of operations with all venues trading. It remains on track to become the most visited attraction in the region with performance driven by strong event delivery, growing visitor demand and improved utilization of our multi-venue site. Our priorities here are fourfold: sustained visitor growth, operational efficiencies across the multi-venue footprint, expansion of a forward events pipeline to reduce seasonality and consistent delivery of a premium customer experience, which will be aligned with the Ayrburn brand. The Ayrburn Classic will be hosted this coming weekend, starting off with our first Tour D'Elegance featuring 40 supercars in classics. The 2026 event has an expanded program, including a live auction and increased sponsorship value. We're very confident that this year's lineup will cement the event positioning in the motoring world. Now I'll turn to Jean, over to you for the financial overview. Thank you.

Thanks, Chris. Good morning, everyone, and thank you for joining us. As Chris mentioned, we are pleased to report our interim results for FY '26. Winton has delivered revenue of $32.4 million, 60% down from $81.1 million in H1 FY '25. A total of 14 units were settled, a decrease of 76 units from 90 in H1 FY '25. Cost of goods sold of $14 million is lower than H1 FY '25 by $43.5 million or 75.7%. As Chris mentioned previously, this decrease in units settled is driven by a period of lower product delivery in our residential development time lines. Commercial revenue increased by $7 million, a 67.4% increase in H1 FY '26 due to all venues at Ayrburn being open and improved occupancy at Cracker Bay. A fair value gain of $1.2 million resulted from the revaluation of commercial and retirement assets within the investment property portfolio. This compares to a loss of $2.8 million in H1 FY '25. Employee benefits expense remained consistent with the prior period at $10 million in H1 FY '26 despite more venues trading at Ayrburn as we continue to build efficiencies within the team. Administrative expenses also remained steady at $5.8 million with a decrease in legal costs, offset by an increase in other expenses due to additional Ayrburn venues trading. Net interest income was $0.5 million lower due to a decrease in average cash reserves. The resultant net loss after tax in H1 FY '26 of $0.9 million, an increase from a loss of $2 million in the prior period. Winton's cash balances remained strong at $14.5 million. During H1 FY '26, the $18.3 million debt facility secured against the office building and Marina complex at Cracker Bay was extended with a new expiry date of November 2027. Winton has no recourse debt at the group level and all other properties, excluding Cracker Bay, Northlake Stage 18, Sunfield and Lakeside across the group remain unencumbered. We note that Winton's debt profile is set to reduce in H2 FY '26 with settlements at Northlake Stage 18 and Lakeside forecast to repay their respective debt facilities in full. An increase in inventories represents progress at Northlake, Stage 15F and Stage 18 as well as Lakeside. During H1 FY '26, Winton's cash flows -- cash outflows included the final land deposit payment for Sunfield. As at FY '24 and FY '25 results, the Board paused paying a dividend to maintain financial discipline during softer market conditions, which remains the Board's view for FY '26. Over to you, Chris.

Thanks, Jean. Turning to the market. Well, the property market has remained subdued in many parts of New Zealand, particularly Auckland, and the economy has continued to struggle. Unemployment continues to increase, and we maintain our view that the residential property market is unlikely to substantially turn around until unemployment has peaked. Whilst the New Zealand economy remains in a subdued state, constrained by rising unemployment, historically low net migration and low construction activity, which is evidenced by ready-mixed concrete volumes, it's hovering below the 10-year averages. Despite these factors, there are some positive signs in Winton's operating environment, including improved borrowing conditions for consumers, increased competition amongst suppliers, lower labor unit costs and policy changes attracting high net worth overseas buyers. It remains our view that given the current economic environment and property market, we must remain both cautious and constrained. We'll continue to conserve resources until there are clear signs of robust growth rather than tentative signs of stabilization. We'll also continue to take a disciplined and selective approach to committing additional capital, pending clear evidence of a sustained improvement in market conditions. We maintain our view that a more positive outlook is likely to emerge only after unemployment has peaked. While remaining appropriately cautious, we enter the second half of FY '26 with confidence in the medium-term fundamentals of both the market and our strategy. Thank you. That brings our presentation to an end, but happy to move to any questions if we have any.

[Operator Instructions] Our first question for today will come from Nicholas Hill with Craigs Investment Partners.

Regarding Northbrook Wanaka, you comment that sales and entry prices are meeting expectations. Are you able to quantify this? How many units were sold over the period?

I'll leave it to Jean.

Nick, sorry, we don't go into that level of detail specifically on individual projects. Yes, I can't comment on that, sorry.

Are you able to provide that detail at an aggregate Northbrook level? Any other settlements? Yes. Okay. Then moving on. What was behind the commencement of Stage 5A at Lakeside? I believe in August, there was some commentary on Stage 4, but I don't think I recall anything mentioned about Stage 5.

It's just in furtherance of our delivery of the satisfaction of our [indiscernible] contract, Nick.

Okay. Was that part of that option? Because I believe some of about 200 units at Lakeside have effectively like an option from...

Not, it wasn't. It's just a base contract.

Okay. And then I guess last one for me before I let someone else have a go. To be clear, when you say that if you are granted approval for Sunfield, you will commence development immediately. Is this in reference to the enabling and wider infrastructure piece? Or does this include -- also include residential units?

Ideally both.

Okay.

You end up doing one -- if it gets to that, you end up doing them largely at the same time.

I guess when you're in the middle of the -- would it be correct in sort of seeing it as I say, if you're in the middle of the infrastructure works and the market sort of improves or becomes active, you can very easily just tack on the lots. That's...

Yes. That's correct.

The next question will come from Rohan Koreman-Smit with Forsyth Barr.

Just a question on a couple of these other comments around works nearing completion. So Northlake, you talk about the balances of Stage 18 nearing completion. Does that mean you expect settlements in the second half there as well?

Yes, that's correct.

Cool. And then Cessnock with Stage 7 commencing and is being released to the market. Can you give an indicative time on when you think those settlements will come through? I'm guessing it's not this financial year, it's probably a '27, '28 story.

That's correct. '27, correct.

And then Sunfield, I've had a look at the draft decision, and it looks like it's largely approved. I'm not a great reader of what the conditions are. So you'll have a view on whether those are appropriate or not, and I'm sure that's probably what you'll be talking about. But I think previously, there was a view that you'd have some early land sales in terms of industrial and obviously, there's the land to NZTA for Mill Road. Is it still the kind of view that you'll get those to market early? And can you give us an indicative timing on when some of those things may be coming through if you get approval...

It's still too early to say. It's a draft decision, and we need to assess where we land, where the project sits after the final decision.

Is there -- I know it's sensitive, but is there anything you can say about the draft conditions versus your initial expectations for the project?

Only that they are draft and it would be -- we wouldn't be commenting on the draft.

Okay. And then maybe last one, just around land sales. There's obviously been the Wynyard thing in the paper. Maybe a comment or 2 on that. And then you've always talked about buying land in terms of building out the resi business. I noticed Ferncliff Farms back on the market. Just a comment around, I guess, future development sites or if kind of Sunfield is the immediate focus before you buy other land.

I think it's fair to say Sunfield is the immediate focus, but it all depends on how and when the decision comes up.

And sorry, the first part of that question was, is there any validity around the recent media article on Wynyard...

I think the media article quoted me saying it's just market gossip and I stand by that, it's nothing but market gossip.

There are no further questions at this time. I would like to hand the call back over to Mr. Meehan for any closing remarks. Please go ahead.

Just a simple thanks again for everyone joining us today. And obviously, if anyone has any follow-up questions, please just e-mail them through to either myself or to Jean. But thank you for joining.

This concludes our conference call for today. Thank you for your participation. You may now disconnect.